(WO) — U.S. upstream mergers and acquisitions slowed sharply in the second quarter as crude price volatility complicated deal valuations, but competition for premium Permian basin inventory remained strong and activity is expected to accelerate later this year, according to Enverus Intelligence Research (EIR).
Total upstream M&A reached $9.1 billion during the quarter, down 76% from the first quarter and 33% from a year earlier, making it the third-lowest quarterly total since 2020. More than 40% of the quarter’s value came from the Bureau of Land Management‘s record-setting New Mexico lease sale, which generated more than $4 billion.
Enverus said volatility tied to the Iran conflict and a weaker natural gas outlook widened bid-ask spreads and delayed transactions rather than reducing buyer interest.
“The quarter looks weak on the headline number, but that understates the strength of the underlying bid for inventory,” said Andrew Dittmar, principal analyst at Enverus Intelligence Research. “We view that as a temporary negotiation obstacle rather than a demand problem.”
Public operators remained the dominant buyers during the quarter, led by record bids for Permian acreage at the New Mexico lease sale and acquisitions including Matador Resources‘ $1.3-billion purchase of Paloma Permian and Magnolia Oil & Gas‘ acquisition of WildFire Energy in the Eagle Ford.
Private buyers backed by asset-backed securitization (ABS) financing also continued expanding their presence, accounting for nearly 30% of asset-level deal activity for a second consecutive quarter. Enverus said ABS-backed acquisitions have helped revive M&A activity in the Anadarko Basin, where more than $5 billion of assets have changed hands so far this year.
Despite slower deal flow, Enverus said pricing for top-tier Permian inventory continues to climb as high-quality drilling locations become increasingly scarce. The firm expects recent transactions to encourage more private operators to market assets while supporting continued demand from public companies.
Gas-focused acquisitions remained limited as lower near-term natural gas prices and a shortage of available Haynesville assets weighed on activity. However, Enverus said long-term LNG demand should continue attracting international investment into U.S. natural gas production.
Looking ahead, the firm expects upstream M&A activity to strengthen during the second half of 2026 as higher oil prices improve free cash flow for buyers and encourage additional private companies to bring assets to market.
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