2024 Mid-Year Outlook

Global M&A Trends in Energy, Utilities & Resources

Global M&A Trends in Energy, Utilities & Resources hero image
  • Insight
  • 8 minute read
  • June 25, 2024

Industrial reconfiguration amid geopolitical shifts and energy transition will drive M&A activity in the energy, utilities, and resources sectors during the second half of 2024.

Greg Oberti

Greg Oberti

National Energy Transition & Utilities Deals Leader, Partner, PwC Canada

At the half-way point of 2024, the energy, utilities and resources (EU&R) sectors continue to be an exciting arena for global M&A. Companies with strong balance sheets are proving to be best-positioned to seize dealmaking opportunities in an industrial landscape which is being actively reconfigured in the face of new geopolitical realities, government initiatives and a continued market focus on energy transition and energy security.

At a glance we are seeing:

  • In the mining and metals sector, consolidation and deals to secure supply of critical minerals are expected to continue.
  • In oil and gas, mega deals are underpinning continued corporate consolidation, as companies diversify asset portfolios and seek synergies.
  • Developers of renewables monetising assets on the back of higher financing rates and construction costs, while publicly-listed utilities recycle non-core assets to fund development pipelines, particularly those in the gas subsector.
  • In the chemicals sector, energy price volatility and sustainability goals are dampening deals activity.

More broadly, we see companies in the EU&R space—and, increasingly, companies in other sectors with EU&R exposure(s) in their supply chains—engaging in ‘friendshoring’ to secure vital feedstocks. The US in particular is becoming an attractive M&A destination because of economic incentives and advanced infrastructure. These trends reflect a broad push towards sustainability, regulatory compliance, portfolio optimisation and strategic consolidation across the resources sector.

Sustainability remains a critical driver in M&A decisions, with regulatory frameworks influencing investments. We expect this will lead to an uptick in M&A activity in the second half of 2024, particularly in the US.

58%

of EU&R CEOs expect government regulation to drive changes in the way their companies create, deliver and capture value over the next three years

Source: PwC’s 27th Annual Global CEO Survey

Reconfiguration is increasingly emerging as an imperative across sectors. Strategic consolidation, government incentives and a focus on sustainability continue to drive M&A activity. As companies navigate these dynamic conditions, they are looking to secure stronger positions in their sub-sectors and forge innovative partnerships to enhance their supply chains and energy security.

“We are observing the reconfiguration of industry across the energy, utilities, resources and chemicals sectors. This is being driven by a clear focus on security of supply, portfolio optimisation, and adapting to ever-widening government incentives and regulations.”

Greg Oberti,Energy Transition & Utilities Deals Leader, Partner, PwC Canada

Spotlight on the reconfiguration imperative

We are seeing an intersection of themes leading to a ‘reconfiguration imperative’. First discussed in the context of the global industrial system, this concept of reconfiguration is an increasingly large driver of global M&A activity. It highlights the need for companies to adapt strategically to global industrial changes driven by geopolitical realities, government initiatives, and the focus on sustainability and energy security.

Based on the key themes we highlighted at the beginning of the year in our 2024 M&A Outlook, we outline below how this reconfiguration imperative is likely to play out across the EU&R sectors.

  • Consolidation: Consolidation is a key way to improve economics and continue to build size and scale. Several large deals announced in late 2023 and three in the first half of 2024 are examples of such consolidation plays, including Diamondback Energy’s proposed merger with Endeavor Energy Resources, ConocoPhillips’ proposed acquisition of Marathon Oil Corporation and Chesapeake Energy’s proposed merger with Southwestern Energy Company. We expect to see more consolidation activity during the second half of 2024.

  • Security of supply: We expect to see security of supply at or near the top of dealmakers’ agendas. When this theme is coupled with the reconfiguration imperative, we expect companies to engage with counterparts outside of their traditional sector(s) in order to shore up supply chains and, increasingly, to secure their energy needs. Examples include automotive OEMs entering into novel deals to secure lithium supplies and major data centre operators acquiring and/or investing outright in greenfield energy sources.

  • Government regulation: The reconfiguration imperative is significantly accelerating as a direct result of government regulation, whether through tax incentives, government-backed pools of capital, policy changes to enhance investment or government intervention in specific projects. Examples include the US Inflation Reduction Act (IRA), the European Union’s Green Deal Industrial Plan and Japan’s Green Transformation Act. All are aimed at increasing investment in a range of low-carbon infrastructure projects and are creating greater impetus for M&A across the EU&R sectors.

  • Portfolio optimisation: As industrial reconfiguration gathers speed around the world, companies have to make capital allocation decisions that seek to align business models with their strongest activities. We expect to see more M&A, strategic alliances and partnerships as companies enter into new verticals in support of their strategic goals. Examples include securing access to critical supply chains and forming partnerships in and around data centres.

M&A outlook for EU&R in the second half of 2024

The 2024 mid-year outlook for global M&A trends in EU&R highlights a dynamic landscape influenced by geopolitical shifts, government initiatives and the energy transition. Key drivers include consolidation, with companies seeking to secure critical mineral supplies and diversify asset portfolios; the impact of government regulations and incentives; and the emphasis on sustainability and energy security. Notable trends include increased M&A activity in mining and metals for securing critical minerals, ongoing consolidation in the oil and gas sector, and heightened dealmaking in the renewable energy space due to higher financing rates and development costs. The US emerges as a prime M&A destination due to economic incentives and advanced infrastructure.

Our commentary on M&A trends is based on data from industry-recognised sources and our own independent research. Specifically, deal values and volumes which we referenced in developing this publication are based on officially announced transactions, excluding rumoured and withdrawn transactions, as provided by the London Stock Exchange Group (LSEG) as of 31 May 2024 and as accessed on 3 June 2024. Certain adjustments to source data have been made to align with PwC’s industry mapping. All dollar amounts are in US dollars.

Greg Oberti is the national energy transition and utilities deals leader. He is a partner with PwC Canada.

The author would like to thank the following PwC colleagues for their contributions: Lauren Bermack, Derek Chu, Hannah Elliott, Ross Hart, Seamus Jiang, Louise Roach, Llewellyn Sterling and Matthew Williams.

Explore our local M&A trends in Energy, Utilities and Resources from the following countries or regions:

Want to know the M&A trends we expected in Energy, Utilities and Resources at the beginning of 2024?

Read our 2024 Outlook

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Greg Oberti

Greg Oberti

National Energy Transition & Utilities Deals Leader, Partner, PwC Canada

Contact us

Paul Hennessy

Paul Hennessy

Partner, PwC Australia

Andy Welsh

Andy Welsh

Partner, PwC Australia

Louise Roach

Louise Roach

Director, PwC Australia

Michelle Grant

Michelle Grant

Partner, PwC Canada

Lauren Bermack

Lauren Bermack

Partner, PwC Canada

Llewellyn Sterling

Llewellyn Sterling

Director, PwC Canada

Franklin Zhai

Franklin Zhai

Partner, PwC China

Sammy Lai

Sammy Lai

Partner, PwC China

Nancy Nie

Nancy Nie

Partner, PwC China

Steve Cheng

Steve Cheng

Partner, PwC China

Eric Douheret

Eric Douheret

Partner, PwC France

Alexis Bossut

Alexis Bossut

Partner, PwC France

Steffen Apfel

Steffen Apfel

Partner, PwC Germany

Volker Fitzner

Volker Fitzner

Partner, PwC Germany

Marc Schmidli

Marc Schmidli

Partner, PwC Switzerland

Matthew Alabaster

Matthew Alabaster

Strategy&, UK Energy, Utilities & Resources Deals Leader, Partner, PwC United Kingdom

Drew Stevenson

Drew Stevenson

UK Energy Utilities and Resources Industry Leader, PwC United Kingdom

Ajay Amin

Ajay Amin

Partner, PwC United Kingdom

Seenu Akunuri

Seenu Akunuri

US Energy, Utilities and Resources Deals Leader, Principal, PwC US

Seamus Jiang

Seamus Jiang

Managing Director, PwC US

Ross Hart

Ross Hart

Partner, PwC Netherlands

Guillaume Laffitte-Rigaud­

Guillaume Laffitte-Rigaud­

Strategy&, Partner, PwC Netherlands

Chris Durieux

Chris Durieux

Partner, PwC Netherlands

Mohit Chopra

Mohit Chopra

Partner, PwC India

Derek Chu

Derek Chu

Partner, PwC Canada

Carlos Sánchez Mercader

Carlos Sánchez Mercader

Partner, PwC Spain