A frenzy of upstream oil and gas dealmaking continued unabated during the second quarter, with transactions inked across Lower 48 oil country.

Upstream M&A activity surpassed more than $30 billion transacted in the second quarter, according to data from Enverus Intelligence Research (EIR).

Before the latest run of consolidation, quarterly M&A value had only topped $30 billion on three occasions since the start of 2017, the firm said.

The U.S. upstream market has seen nearly $250 billion transacted in the past 12 months; nearly $90 billion worth of transactions, including July deals, have been announced this year.

“M&A momentum carried into the second quarter as pressure built on companies like ConocoPhillips, Devon Energy and SM Energy, that had previously stayed out of the market to keep pace with peers and grow in scale,” said Andrew Dittmar, principal analyst at EIR. “In the case of ConocoPhillips and Devon Energy, running out of inventory doesn’t appear to be as high a concern, but there is still a perception that successfully navigating the maturing phase of shale requires building resource base with M&A.”

The largest transaction of the quarter was ConocoPhillips’ blockbuster acquisition of public rival Marathon Oil, valued at $17.1 billion, not including debt.

The tie-up between ConocoPhillips and Marathon Oil will consolidate huge swathes of land in the Permian Basin, the Eagle Ford Shale and the Bakken.

The second-largest deal of the quarter was a joint bid by SM Energy and Northern Oil & Gas (NOG) to acquire XCL Resources, a private operator in Utah’s Uinta Basin.

NOG, in partnership with SM Energy, will buy a 20% stake in XCL for $510 million. SM is paying $2.04 billion for the 80% majority interest, bringing the total deal value to $2.55 billion.

Coming in at third, Crescent Energy’s agreement to acquire SilverBow Resources for $2.1 billion.

The deal, which closed on July 30, creates the second-largest operator in the Eagle Ford Shale of South Texas. Crescent also has a footprint in Utah’s Uinta Basin.

In the mighty Permian Basin, Matador Resources announced a $1.9 billion acquisition of private E&P Ameredev II—the fourth-largest upstream transaction of the quarter.

The Ameredev deal includes producing assets and undeveloped acreage in Lea County, New Mexico, and Loving and Winkler counties, Texas—an area that operators and experts largely consider to be the core of the Permian’s Delaware Basin.

A Williston Basin deal ranked fifth-largest was inked in the second quarter: TXO Partners’ acquisitions from Eagle Mountain Energy Partners and Kaiser-Francis Oil Co. for $298 million.

The deals will deliver to TXO assets in the Elm Coulee field of Montana and the Russian Creek field of North Dakota.

Dealmaking extended into the third quarter, too. Devon Energy announced a $5 billion acquisition of Bakken E&P Grayson Mill Energy in early July.

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Permian priced out

The Permian Basin, the nation’s top oil-producing region, dominated dealmaking activity last year and into early 2024.

Major Permian transactions included Exxon Mobil’s $60 billion acquisition of Pioneer Natural Resources, Diamondback Energy’s $26 billion acquisition of Endeavor Energy Resources, and Occidental Petroleum’s $12 billion acquisition of CrownRock LP.

But the increasing cost of buying drilling inventory in the Permian has emerged as a major theme in upstream M&A throughout this year, Dittmar said.

“With the highest quality inventory selling at premium pricing, there has been a scramble for middle-tier inventory that provides strong returns even if it isn’t as economic as core Permian assets,” Dittmar said.

That dynamic has led to an uptick in deal activity in mature horizontal plays, like the Eagle Ford and the Williston.

It also drove SM Energy into Utah’s Uinta Basin, a waxy crude oil play where the company has never drilled before.

Dittmar said there’s an opportunity for private equity sponsors to divest even more portfolio companies in the Eagle Ford and in the Midcontinent’s SCOOP-STACK plays.

Verdun Oil, backed by EnCap Investments LP, and WildFire Energy, backed by Kayne Anderson and Warburg Pincus, “would be two likely sellers in the Eagle Ford,” according to Enverus.

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