A survey of oil and gas company executives suggests another active year awaits in terms of mergers and acquisitions (M&A).
Law firm Lathrop GPM asked 100 senior executives late last fall about their most pressing priorities and most nagging concerns. Among the headline responses: More than half of respondents—63% of whom have upstream operations—expect their organizations to take part in some sort of transaction in 2025, with 26% saying a deal is “very likely” for their company. Only a quarter of executives said they are unlikely to get into the M&A arena this year.
The factors driving that deal appetite differ slightly from large firms (defined by the Lathrop GPM team as having at least $1 billion in revenue) and their smaller peers: Among the industry’s top players, acquiring technology or expertise is the top motivator and was cited by 52% of respondents.
For smaller-company leaders, however, improving cash flows is most important when trying to secure a deal: 39% of them called that an important catalyst, suggesting that the Wall Street mantra of capital discipline and shareholder returns is filtering down from the industry’s most prominent names.
Also notable among deal catalysts are the desire for operational efficiencies, access to resources and meeting decarbonization goals. Less so—and cited by only 14% of respondents—is the desire to diversify assets.
“As the push for carbon reduction and AI adoption intensifies amid ongoing economic and regulatory uncertainty, there is no shortage of obstacles facing O&G [oil and gas] executives in 2025,” Patrick McRorie, chair of Lathrop GPM’s energy practice, said about the firm’s survey findings. “It should be an exciting year as major players look to M&A and further technology upgrades to stay ahead of the competition.”
The headline M&A findings in the Lathrop GPM study echo those in an October report from Grant Thornton (OGJ Online, Oct. 16, 2024). The chief financial officers who responded to that survey were equally expectant of deals and buoyed by greater confidence that demand for hydrocarbons will be more enduring than some scenarios of recent years predicted.
Also enduring among executives—in addition to their goal of becoming more efficient—is their pointing to regulatory and compliance pressures as a major concern. Among respondents, 52% put that category among their top three concerns for 2025. That number might be lower now, though: The most recent Dallas Fed Energy Survey showed executives growing more optimistic in part because of the expectation that the second Trump administration will ease energy regulations (OGJ Online, Jan. 3, 2025).
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.