Despite a record-breaking year in mergers and acquisitions (M&A) amounting to $200 billion, consolidation within the U.S. oil and gas sector remains insufficient, according to an investigation by sector expert Javier Blas. The industry continues to maintain a high number of active companies per-barrel, an excess of executive roles, and an overabundance of drilling rigs, all vying for a finite supply of capital.
Blas’ report reveals an industry still in a state of flux, having undergone substantial transformations linked to the COVID-19 pandemic. As a result, the oil and gas industry today is notably leaner than in past years. However, Blas emphasizes the necessity for further M&A activity to reduce redundancies, streamline operations, and ensure a more efficient allocation of available financial resources.
Despite past consolidation efforts, the current state of the oil and gas landscape points to a sector that is still oversaturated, with significant possible implications for market stability. There is an unequivocal need for increased M&A activity, in what may shape up to be a defining trend in the sector throughout the coming years.