Oil & Gas in 2026: M&A and Joint Venture Activity

Macro Issues Dampen Deal Flow but Momentum Builds for 2026

This article is part of the "Oil & Gas in 2026: Emerging Trends & Predictions" report. For the full report, click here.

A combination of macroeconomic uncertainty, geopolitical shifts and volatile oil prices had an impact on M&A activity in the oil & gas industry through 2025. Notably, new or increased tariffs on U.S. imports of steel and aluminum raised operational and capital costs for many companies operating in the sector. Meanwhile, trade agreements between the United States and its foreign counterparts (including those agreements with energy purchase commitments) helped to shape the new competitive landscape in the industry. And proposed (and subsequently paused) fees on vessels carrying various energy products disrupted global supply chains.

After a sluggish first half, during which evolving trade policies had a chilling effect on deal activity and oil prices came down dramatically, dealmaking showed signs of recovery in the second part of the year, particularly for upstream assets.

As we move into 2026, our hope is that the green shoots of deal activity that emerged in the latter part of 2025 will continue to strengthen, though the outlook for M&A in oil & gas remains largely dependent on commodity prices. While oil prices currently sit below $70 per barrel, the relative appetites of sellers and buyers for selling assets or companies is likely to remain muted.

That said, despite the low price of hydrocarbons, the vast majority of exploration and production (E&P) companies and midstream players continue to be profitable. Given the relative health of balance sheets compared to prior periods of low oil prices, there is little sign of distressed M&A. Businesses are not being forced to transact, so most of the deals we see are opportunistic and we expect that to continue in the year ahead.

Strategic M&A

A Patchy Year Ends with More Activity Going into 2026

The mega deals that have dominated oil & gas headlines over recent years were notably absent from M&A activity in 2025. Upstream activity showed signs of rallying in the second half, and we hope a more predictable macro backdrop will bring more deals in the coming year.

• Upstream Assets Slow to Trade: In its H1 2025 review of M&A activity in the oil & gas sector, Wood Mackenzie noted that upstream deal volumes were well below the 10-year average following the seventh consecutive half-year drop. In all, 85 upstream M&A deals were announced in the first half of 2025, a 10% drop on the same period in 2024. Seemingly gone are the days of blockbuster deal activity that saw the $60 billion combination of ExxonMobil and Pioneer Natural Resources in 2023 and Chevron’s $53 billion purchase of rival Hess, completed in July 2025, though news leaked in January 2026 that two major U.S. shale producers may be in talks to combine, which would yield a new upstream company with a market capitalization greater than $40 billion.
  
  
• A Strong Year for Gas Transactions: 2025 saw a number of significant transactions in the gas space. Major deals saw shale producer EOG pay $5.6 billion for Encino Acquisition Partners, combining large acreage positions in the Utica, and the sale of Olympus Energy and its Marcellus assets to EQT for $1.8 billion.
  
  Demand for North American natural gas is being strengthened by growing demand for industrial, commercial and residential grid power, strengthened by the focus on data centers and LNG for export. There had also been some regulatory uncertainty around the next wave of U.S. LNG projects at the end of the Biden administration, which has largely been resolved with President Trump now moving to fast-track approvals of new LNG infrastructure.
  
  The year also saw a focus among sovereign wealth funds and other international investors in acquiring upstream and midstream natural gas assets on inland shale basins near the U.S. coast. Japan’s top power generator, JERA, paid $1.5 billion for Haynesville shale gas assets in Louisiana, for example, attracted by its proximity to Gulf Coast LNG export facilities. In addition, Mitsubishi Corporation recently announced its acquisition of Haynesville shale gas assets in Texas and Louisiana from Aethon Energy Management for a total equity investment of approximately $5.2 billion.
  
  

• Midstream Activity Remains Solid: In a bumpy year for oil & gas deals, midstream activity stayed relatively solid due to a focus on developing infrastructure to support growing demand associated with the increased buildout of data centers and overall energy consumption. We did see some failed processes where potential buyers proved unwilling to pay the multiples they once accepted, but if deals could meet key parameters there were plenty of closings.
  
  Large M&A in the midstream space has historically been constrained by antitrust concerns in the U.S., particularly where assets have a tie to distributing refined products that could impact consumer pricing. We are yet to see how the Federal Trade Commission will behave under the new administration, but it has indicated a more permissive approach to transactional oversight.
  
  There was a fair bit of activity around water infrastructure in 2025. Western Midstream completed its acquisition of Aris Water Solutions for $1.25 billion in October, for example, creating a large integrated water midstream platform in the Delaware Basin.
  
  The LNG subsector was also active, with deals such as Stonepeak Capital’s acquisition of a 40% interest in Louisiana LNG, a production and export terminal, from Woodside for $5.7 billion, and Sempra’s sale of a 45% stake in its Sempra Infrastructure Partners unit to KKR and Canada Pension Plan Investment Board for $10 billion.
  
  

• Downstream Assets Change Hands: Refinery deals were few and far between through 2025 as a result of weak crack spreads. In Europe, for example, downstream asset sales were a theme as larger oil & gas players executed on strategies focused around their most profitable areas, driving mid-market consolidation. BP completed its exit from all of its downstream fuel operations in Turkey in 2025, with a sale to Vitol’s local subsidiary Petrol Ofisi, for example.
  
  
• A Focus on Consolidation in Oilfield Services: The oilfield services subsector is one that saw a number of M&A transactions through 2025, with the larger market  players continuing to grow revenues and EBITDA through acquisition, disposing of lower-margin businesses and investing in new technologies.
  
  In June, Baker Hughes announced the sale of 65% of its surface pressure control business to equipment maker Cactus for $350 million as it focuses on its core business, while Schlumberger, the world’s largest oilfield services provider, completed its acquisition of ChampionX and acquired RESMAN Energy Technology, a leader in wireless reservoir surveillance solutions.
  
  

• Middle East Sovereigns Prioritize Globalization: The past year has seen increased international activity from Middle East sovereigns, with both ADNOC and Saudi Aramco announcing meaningful international expansion plans.
  
  In March, ADNOC reached a deal with Austria’s OMV to combine their petrochemical businesses and acquire Canada’s Nova Chemicals, creating a new $60 billion company called Borouge Group International. That transaction followed ADNOC’s launch in late 2024 of XRG, an international low carbon and chemicals investment business, which was responsible for the successful acquisition of German chemical company Covestro in 2025.
  
  Aramco, for its part, has significantly ramped up its U.S. energy deal activity, with a particular focus on LNG and technology, signing major preliminary deals potentially worth tens of billions with U.S. firms like MidOcean Energy, Commonwealth LNG, NextDecade and suppliers such as Baker Hughes, Halliburton and SLB, focusing on LNG projects and emissions-reduction technology to expand global gas reach and strategic U.S. ties under its Vision 2030.

Private Equity

Capital Available for the Right Management Teams

Several large fundraises by private equity sponsors mean there is plenty of capital available for oil & gas investments, but only experienced management teams with the right focus are getting funded.

• New Equity Capital Is Flowing In: The energy sector has proved something of a bright spot in an otherwise challenging private equity fundraising market. At the end of 2024, Quantum Energy Partners held a $5.58 billion final close on its eighth flagship private equity fund. Less than a year later, in June, it announced plans to raise $4.5 billion for its successor ninth oil & gas focused fund. EnCap Investments also successfully closed on a $5.25 billion fund in late 2024, around the same time that NGP Energy Capital closed its Fund XIII at $2.3 billion.
  
  U.S. private equity funds continue to look for opportunities to deploy capital in the Permian, Haynesville and Eagle Ford basins, with less appetite for the northeastern regions. As M&A markets recover through 2026, we expect PE deal volumes to rebound given the dry powder now available for transactions.
  
  

• Exit Markets Remain Challenging: A number of private equity-backed midstream companies were seeking exits through 2025 but faced challenges in the market environment, with public companies less willing to pay high multiples unless deals were purely accretive.
  
  EnCap closed a $2 billion continuation vehicle for PennEnergy Resources in October 2025—the largest capital raise for a continuation vehicle (CV) in the upstream energy sector. CV deals are becoming more common as funds move to return LP capital and shore up assets in one of the most challenging seller’s markets we have seen for a long time. Family offices are increasingly investing in the sector, including through CVs. The old PE model in the sector of “build and flip” is becoming increasingly aligned with a “hold and distribute” model.
  
  Public E&P consolidation was expected to create opportunities for PE as larger players divested non-core assets, but sales proved limited given that public companies are under little pressure to sell. As such, there are few quality assets available for PE firms to spend their money on.
  
  

• Oil & Gas Transportation, A Bright Spot for Deals: PE firms were active in the oil & gas transportation sector in 2025, with a number of transactions for crude oil and natural gas pipelines, refined fuel distributors and shipping companies.
  
  Data from S&P Global shows $4 billion was deployed across 13 deals globally in the transportation segment in the first seven months of the year, surpassing the same period in 2024. Five of those deals were in the U.S. and Canada, and four in Europe, where the largest transaction was Apollo Global Management’s $1 billion purchase of a 25% stake in U.K.-based BP Pipelines from BP.
  
  In the U.S., a standout deal was Brookfield Infrastructure’s $9 billion acquisition of the midstream asset portfolio of Colonial Enterprises, which included the Colonial Pipeline, the largest refined products system in the U.S., spanning approximately 5,500 miles between Texas and New York.
  
  In the Middle East, Aramco finalized an $11 billion lease-and-leaseback deal in August 2025 for its Jafurah unconventional gas assets with a consortium led by Global Infrastructure Partners (GIP). The 20-year agreement creates a new subsidiary, Jafurah Midstream Gas Company, 51% owned by Aramco and 49% by GIP and partners, to manage, treat and process gas for the massive field.

Corporate Joint Ventures

Strategic Partnerships Gather Momentum

There is a growing trend for strategic corporate joint ventures in upstream oil & gas, either between strategic participants or between strategics and private equity portfolio companies.

• Economies of Scale Driving JV Appetite: Oil & gas companies increasingly see the benefits of strategic joint ventures as a means to share costs and risks when teaming up on large projects. While such partnerships are not new in the oil & gas industry for large capital projects, they have typically been structured by way of unincorporated joint ventures, rather than corporate joint ventures. Such deals allow for the JVs to put leverage onto standalone balance sheets.
  
  Beginning in late 2024 through the end of 2025, we saw a flurry of transactions, including Eni and Petronas signing a deal to combine upstream assets in Indonesia and Malaysia to invest over $15 billion in eight new projects; Shell and Equinor combining their U.K. offshore oil & gas assets to form the North Sea’s biggest independent producer; and, BP and ADNOC creating Arcius Energy to focus on developing natural gas assets in Egypt.

Conclusion

A Bumpy 2025; Oil Prices Will Influence 2026 Deal Flow

With oil prices volatile throughout 2025 and both geopolitical and macroeconomic trends muting deal flow, the uptick in transactions seen in the second half of the year was largely driven by opportunistic M&A. While deals did continue to get done, the past 12 months saw nothing like the mega deals of the previous few years, as cash-rich oil & gas companies opted to sit on their hands rather than transact in challenging markets.

As the global oil & gas industry continues to undergo a strategic reset, characterized by consolidation, equity investors’ continued insistence on significant returns of capital, and a reconfiguring by majors around key business areas, activist investors have started to take positions in upstream and midstream companies. Some of those investors are oil & gas-specific and have long challenged diversified business models that include multiple basins or multiple commodities. We expect that other generalist activists may return to the sector, as the reputational issues associated with hydrocarbon investing appear to have receded. As a result, we expect this activist trend to continue, potentially leading to more divestitures or consolidation plays.

Moving into 2026, oil markets continue to be influenced by geopolitical and macro themes, as well as supply and demand dynamics. Market volatility means the mismatch in valuation expectations between buyers and sellers persists, but if 2026 brings lower interest rates and increasing clarity around the global trade policy environment, M&A should start to recover. The huge demand for power coming from AI and other emerging tech, and the isolated power demands being created by data centers, will undoubtedly continue to attract capital and fuel deal activity.