U.S. oil sector bonds fall by $12 billion as volatility curbs deals

“Commodity prices spiked following Russia’s invasion of Ukraine, temporarily halting mergers and acquisitions as buyers and sellers disagreed on the value of assets,” said Andrew Dittmar, director of Enverus Intelligence Research.

U.S. benchmark crude oil futures rose to $123 a barrel in early March following the Russian invasion of Ukraine, but prices cooled as recession worries resurfaced. Private equity fueled interest in mergers and acquisitions last quarter and boosted some deals. Dittmer said. Private equity sellers accounted for about 80% of the quarter’s total transaction value, Enverus data showed.

Price resistance

Oil prices this year have spurred a rush by private investors to market assets across the U.S. shale play, Dittmar said.

“The challenge is finding buyers who are willing to pay their asking prices,” Dittmar added.

The Permian Basin of West Texas and New Mexico accounted for 46% of last quarter’s transaction value, making it the most active oil and gas region in the United States. The Rockies followed at 12%, the Midcontinent at 6%, the US Gulf Coast at 5% and the West Coast at 2%, according to Enverus data. The Gulf of Mexico, the eastern United States and Alaska have not recorded any contracts.

A third of the total contract value came from a merger between privately held Colgate Energy Partners III and Centennial Resource Development.

Other top deals in the quarter included a $1.3 billion deal between Gray Rock Investment Partners and Executive Network Partnering Corp. to form Granite Ridge Resources.