Permian Demand Holds Strong Despite Q2 Dip in U.S. Upstream M&A
admin 
**U.S. Upstream M&A Slows in Q2, but Permian Basin Demand Holds Strong**
According to a report from Enverus Intelligence Research (EIR), mergers and acquisitions in the U.S. upstream sector experienced a sharp decline during the second quarter. Fluctuations in crude oil prices created challenges for asset valuations, though competition for high-quality inventory in the Permian basin remained intense. Analysts anticipate a rebound in deal activity later this year.
Upstream M&A transaction volume totaled $9.1 billion for the quarter, representing a 76% drop compared to the first quarter and a 33% decline year-over-year. This marked the third-lowest quarterly total recorded since 2020. Notably, over 40% of the quarter’s total value came from a single source: the Bureau of Land Management’s record-breaking lease sale in New Mexico, which brought in more than $4 billion.
Enverus attributed the slowdown to geopolitical volatility in Iran and a weaker outlook for natural gas, both of which widened the pricing gap between buyers and sellers. Rather than dampening overall buyer interest, these factors primarily delayed the completion of transactions.
“The headline figure suggests a weak quarter, but that obscures the strong underlying demand for high-quality inventory,” noted Andrew Dittmar, principal analyst at EIR. “We see this as a temporary hurdle in negotiations rather than a decline in market demand.”
Publicly traded operators led the purchasing activity during the quarter. Key transactions included record-setting bids for Permian acreage at the New Mexico lease sale, Matador Resources’ $1.3 billion acquisition of Paloma Permian, and Magnolia Oil & Gas’ purchase of WildFire Energy assets in the Eagle Ford shale.
Meanwhile, private buyers utilizing asset-backed securitization (ABS) financing maintained a strong presence, accounting for nearly 30% of asset-level deals for the second quarter in a row. Enverus highlighted that ABS-financed transactions have helped revitalize deal-making in the Anadarko Basin, where asset transfers have exceeded $5 billion so far this year.
Despite the slower transaction pace, the cost of premium Permian inventory continues to rise as top-tier drilling locations become scarcer. Enverus expects recent high-value deals to prompt more private operators to put their assets up for sale, meeting continued demand from public companies looking to secure future drilling inventory.
In contrast, natural gas-focused M&A remained subdued due to depressed near-term gas prices and a limited inventory of available Haynesville shale assets. However, Enverus projects that long-term demand for liquefied natural gas (LNG) will keep drawing international capital into U.S. gas production.
Moving into the second half of 2026, Enverus forecasts a strengthening in upstream M&A activity. Higher oil prices are expected to boost free cash flow for buyers while encouraging more private operators to list their assets.
