Report: Oilfield services consolidation will increase under Trump
According to Deloitte’s 2025 Oil and Gas Industry Outlook report, the oilfield services sector will consolidate in 2025. Donald Trump is expected to loosen regulations for the U.S. industry.
This increase in services deals follows a wave mega-mergers between oil producers such as Exxon Mobil, Pioneer Natural Resources, and ConocoPhillips, Marathon Oil.
Deloitte is the largest consultancy in the world. Deloitte says that small oilfield companies may seek to buy out their customers as they consolidate and shrink. This follows a flurry of M&A across upstream clients.
Why it Matters
The shale-field deals in the United States have reduced the customer base of oilfield companies, particularly those located in the Permian Basin that spans Texas and New Mexico. According to the EIA this field will produce 6.51 millions bpd in 2025. This is up from 6.29 million bpd in 2024. This field accounts for less than half of the total U.S. production.
By the Numbers
According to Deloitte, oilfield services deals in the first nine-month period of 2024 reached a record high of $19.7 billion. This is the highest level since 2018.
The value of drilling rig deals reached $3.8 billion in 2024, the second highest level since 2018.
KEY QUOTES
John England, Deloitte’s global sector leader of oil, gas, and chemicals, said that the new administration would be a positive one for M&A. He also predicted that there will be a slight loosening in the M&A process, as it had become more difficult over the past few years to complete M&A deals.
U.S. legislators have asked the Federal Trade Commission to increase its scrutiny of multi-billion dollar transactions.
After the FTC asked for more information in April, gas producers Chesapeake Energy & Southwestern Energy postponed their $7.4 billion merger. The deal was closed in October. Exxon Mobil received similar requests by the FTC in relation to their $60 billion merger which closed in May.
England stated that "a fairly fragmented market (for oilfield services) and some easing of the administration set a nice scene for possible consolidation." (Reporting from Georgina McCartney, Houston;)
(source: Reuters)
