FEATURE: US basin M&A activity continues into 2022 following eight-year high set in 2021

Merger and acquisition activity in US shale basins reached an eight-year high value of $59.6 billion in 2021, with the majority of the deals occurring in the Permian, and this appears to be continuing into the new year.

The latest, all-stock deal, valued at $1.9 billion, is between Falcon Mineral and Desert Peak. It would result in a merged company with projected combined production of 13,500-14,500 boe/d in the first half of 2022, of which 50% to 53% is expected to be crude oil. Approximately 73% is expected to be from the Permian Basin. The deal is slated to close in the second quarter.

In 2021, the Permian once again led all basins in M&A activity by a substantial sum, making up 62% of all deals. The Haynesville came in second with 12% of all deals, followed by the Denver-Julesburg and Appalachia, each making up around 6%.

Last year presented operators with a robust commodity price environment for both natural gas and crude. While this boosted drilling and completion activity all year, it also led operators to buy and sell a large number of assets.

Two trends emerged for a number of the deals within the Permian and Haynesville. First, many operators consolidated their positions in the Permian, either by adding to their current position or by selling off other assets outside of the Permian to generate more working capital.

Noteworthy deals of Permian consolidation include Pioneer's purchase of DoublePoint Energy for $6.4 billion in April, the deal between Colgate & Luxe Energy for $1.5 billion in June, ConocoPhillips buying all of Shell's Delaware Basin acreage for $9.5 billion in September, and Continental acquiring Permian acreage from Pioneer for $3.25 billion in November and,in December, Earthstone Energy's acquisition of Chisholm Energy for $604 million and Repsol's purchase of Rockdale for $222 million.

Also, large public natural gas operators bought into the Haynesville to ensure access to more gas reserves. Deals of portfolio diversification include Southwestern's purchase of Indigo Natural Resources for $2.7 billion in June, Chesapeake Energy acquiring Vine Energy for $2.2 billion in August, and Southwestern's buyout of GEP for $1.85 billion in November.

Broadly speaking, 2021 M&A activity provided insight into operators' plans. Many came out and clearly identified what assets they view as their primary acreage positions and made moves to strengthen those assets either by growing their footprint or by enhancing their financial positions through the sale of non-core assets.