The Winning Way to Programmatic M&A in Oil & Gas

A recent BTI Consulting study revealed that more than 50% of M&A transactions are not budgeted for by in-house legal departments.^[1] This statistic underscores a common issue—a lack of planning and systematic approaches in navigating complex transactions. With the energy market poised for a significant wave of divestitures and strategic acquisitions, particularly among non-core assets, this lack of preparation could expose companies to unnecessary risks and inefficiencies.

History teaches us that market disruptions and deregulations often favor buyers who are ready to act decisively. Just like the fallout from energy deregulation in the early 2000s led to many assets being privatized, the current situation is creating a similar trend. Private equity, strategic buyers, and mid-sized operators are poised to capitalize on opportunities, as consolidators offload non-core assets to focus on higher-quality inventory. These transactions will likely occur at a rapid pace and companies that lack a proactive, process-driven approach risk being left behind.

Why Now Is the Time to Prepare

Historical Precedent Suggests Accelerated Activity
- Following the shale revolution, the 2014 commodity price crash, and COVID-19’s demand destruction, periods of market volatility have consistently catalyzed waves of transactions. Distressed assets from these disruptions have provided unique opportunities for prepared buyers.
- Large consolidators are currently focusing on higher-quality drilling inventory, leaving behind valuable non-core assets for buyers to acquire at favorable terms.
Strategic Buyers and Private Equity Are Ready
- Strategic Buyers are well-positioned to leverage operational synergies, acquiring non-core assets that align with their basin-specific or value-driven strategies.
- Private equity firms are armed with significant dry powder and can often act quickly, using flexible and creative deal structures to gain an advantage in competitive asset sales.
Regulatory and Financial Pressures
- Non-core assets often carry reserve classification risks, as SEC rules require undeveloped reserves to be monetized within five years to remain classified as proved undeveloped reserves. This should create urgency for sellers to divest these non-core assets sooner rather than later.
- Rising service costs and operational inefficiencies should further incentivize divestitures, which may create opportunities for systematic acquirers to unlock value.

Competitive Advantages of a Process-Driven Approach

A process-driven approach to M&A can provide significant advantages in navigating the complexities of today’s energy market. Organizations that adopt systematic methodologies are better positioned to anticipate challenges, manage risks, and capitalize on opportunities.^[2] Key benefits include:

Informed Decision-Making: Leveraging insights into market trends and historical data ensures risks are identified and opportunities are seized during M&A activities.
Efficient Execution: Structured processes, combined with project management principles, enable transactions to be completed within budget and on schedule.
Cost Transparency: Predictable pricing models and real-time financial tracking help organizations maintain control over expenses throughout the transaction lifecycle.
Strategic Alignment: Tailored approaches to acquisitions or divestitures ensure alignment with business goals and operational needs.

The Stakes Are High

With the capital markets largely closed to traditional energy companies, strategic acquisitions and divestitures will define the next chapter of the oil and gas industry. Companies that instead rely on a reactive approach risk:

Missed Opportunities: Being outpaced by competitors with better planning and faster execution.
Higher Costs: Facing unbudgeted expenses and inefficiencies during transactions.
Post-Closing Risks: Failing to anticipate regulatory, operational, or financial issues.

Partnering for Success

Organizations that prioritize preparation and process-driven methodologies will be better equipped to navigate today’s rapidly evolving energy market.^[3] By adopting systematic approaches to M&A, companies can enhance transaction outcomes and reduce risks to achieve their strategic objectives. Systematic methodologies not only provide resilience in a volatile market but can also help to build a foundation for long-term success.

[1] BTI Practice Outlook 2025: Clients Face the Legal Firestorm and Brace for Unprecedented Challenges, The BTI Consulting Group (2025), https://bticonsulting.com/bti-practice-outlook.
[2] Werner Rehm, Robert Uhlaner, and Andy West, Taking a longer-term look at M&A value creation, McKinsey & Company (January 1, 2012), https://www.mckinsey.com/business-functions/strategy-andcorporate-finance/our-insights/taking-a-longer-term-look-at-m-and-a-value-creation.
[3] Kees Cools et. al., The Brave New World of M&A: How to Create Value from Mergers and Acquisitions, Boston Consulting Group (July 2007); Floyd Plettenberg, M&A as second nature; an accelerator of innovation and growth, Dealsuite.com (June 12, 2020), https://www.dealsuite.com/articles/ma-as-second-nature.