2024 Outlook

Global M&A Trends in Energy, Utilities & Resources

Global M&A Trends in Energy, Utilities & Resources hero image
  • Insight
  • 7 Minute Read
  • January 23, 2024

Energy, utilities and resources sectors will be a bright spot for M&A activity in 2024 as the energy transition continues to attract investor interest.

Michelle Grant

Michelle Grant

National Deals Energy, Utilities, Mining and Industrials Leader, Partner, PwC Canada

The energy, utilities and resources (EU&R) sectors are seen as a bright spot for M&A activity in 2024, despite the backdrop of general economic uncertainty. We expect EU&R sectors to continue to trend favourably in 2024 in terms of deal value and volumes.

Capital continues to flow into the EU&R sectors as investors place bets on the importance of the energy transition in society achieving its net zero goals. We continue to see significant interest from broader capital pools, directing funds to M&A and into greenfield and brownfield projects. With capital likely to flow away from assets that are not compatible with a net zero transition and toward opportunities that are, some subsectors may inevitably struggle to secure necessary financing. In these situations, companies with the strongest balance sheets will be well positioned to take advantage of potential deals and the opportunity to create value.

The pace of transformation required to fuel the energy transition has lagged behind expectations. Will 2024 be the year we see a significant uptick in transformational deals across the EU&R sectors? For some time, environmental, social and governance (ESG) has been the key driver of deals in the EU&R sectors. In recent months, however, it appears to be taking a back seat in certain sectors as economic headwinds dictate capital priorities in the short term. Will this trend continue through 2024, or will we see a resurgence of ESG-focused deals in 2024? We continue to believe that energy transition and sustainability will remain critical drivers of deals in the EU&R sectors for the foreseeable future, and we expect stakeholders to refocus efforts on these areas in 2024.

Global CEOs concerned about their company's exposure to climate change (%)

Source: PwC's 27th Annual Global CEO Survey

In PwC’s 27th Annual Global CEO Survey, EU&R CEOs reported being twice as likely as other industry CEOs to be extremely or highly concerned about the risks climate change presents for their companies in the next 12 months. Together with the COP28 landmark deal struck in December 2023—to transition away from fossil fuels—we expect this concern will only grow as CEOs take necessary actions to transform their business models and invest in the energy transition. This, in turn, will positively affect M&A activity in both the near term and medium term.

In addition to the broader theme of energy transition, we discuss further why consolidation, government regulation, security of supply and portfolio optimisation will all be key themes affecting EU&R M&A activity in 2024.

“Globally, M&A will continue to play a key role in the pursuit of strategic energy transition objectives as businesses seek transformational opportunities for future growth and prosperity.”

Michelle Grant,National Energy, Utilities, Mining and Industrials Deals Leader, Partner, PwC Canada

Spotlight on the electric vehicle value chain

There’s been a lot of discussion about the convergence of activities across industries, sectors and sources of capital over the past few years as businesses position themselves for the energy transition. One prevalent example of this is the intersection of several industrial manufacturing sectors with energy, power and utilities and the mining sectors as a result of growing demand for electric vehicles (EVs).

EV value chain image

Source: PwC

The EV value chain starts with the raw materials that are required to eventually produce the battery and other key components of an EV and ends with the recycling of vehicles at the end of their useful life. There are growing interdependencies at each stage of the value chain. For example, clean energy will ultimately power the mines that are the source of the minerals and metals used for EV batteries and other components, and the vehicles working at the mine sites will be autonomous.

Several players are repositioning to capitalise on this transition and using transactions to drive transformation, including the following:

  • Energy companies repositioning for the future by, among other things, purchasing lithium properties. For example, in November 2023, Exxon Mobil announced plans to become a leading producer of lithium by drilling in Arkansas—an area it acquired the rights for earlier in the year—and evaluating other growth opportunities globally.

  • Original equipment manufacturers (OEMs) that are investing directly in mining companies or negotiating offtake agreements to ensure security of supply for the EVs of the future. For example, General Motors (GM) announced a US$650m equity investment in Lithium Americas to jointly develop a lithium mine in Nevada, with lithium carbonate mined under the agreement to be used in GM’s battery cells for EV production. Ford Motor Company has also signed new lithium offtake agreements with certain raw-material suppliers, and Tesla signed an agreement with Australia’s Magnis Energy to supply battery anode materials.

The entire EV value chain has been a major contributor to M&A growth in the EU&R sectors over the past few years, and we expect that to continue in 2024 as companies position themselves for a future in which EV vehicles are the dominant vehicle on the global market and internal combustion engine (ICE) vehicles are a thing of the past. These companies, together with multiple other stakeholders, will work together to transform business models, create sustained outcomes and make the energy transition a reality.

Key M&A themes for EU&R in 2024

While the energy transition remains the main theme driving activity across the EU&R sectors, several other themes are prevalent.


We continue to see consolidation as a key theme across the EU&R sectors to improve economics and continue to build size and scale. Several large deals announced during 2023 are examples of such consolidation plays, including Exxon Mobil’s planned US$59bn acquisition of Pioneer Natural Resources, Chevron’s planned US$53bn acquisition of Hess and Newmont’s US$17bn acquisition of Newcrest. We expect this trend to continue through 2024.

Government regulation

Government regulation continues to drive M&A, whether through tax incentives, government-backed pools of capital, policy changes to enhance investment or government intervention in specific projects. 

Since the US Inflation Reduction Act (IRA) was passed into law in mid-2022, its impact has not only spurred significant investment in the EU&R sector in the United States but also led to Europe and other countries creating their own incentive packages. For example, Europe’s Green Deal Industrial Plan and Japan’s draft Green Transformation Act aim to increase the level of investment in a range of low-carbon infrastructure projects, with the goal to boost the competitiveness of their own net zero emission industries and accelerate the transition to carbon neutrality.

The subsectors we expect will benefit most from government incentives are batteries (including critical minerals) and energy storage, hydrogen fuel, and infrastructure investments related to longer-term carbon capture projects, creating additional opportunities for M&A.

We expect a heightened focus on government regulations in the context of geopolitical risk that will assist in either attracting or detracting from investments in various regions as deals are assessed in 2024.

Security of supply

Security of supply is a prevalent theme across the EU&R sectors, particularly when thinking about future growth opportunities linked to the EV value chain (affecting all EU&R sectors), and in power and utilities when thinking specifically about energy security. Increased geopolitical tension will likely keep security of supply high on CEOs’ agendas.

Security of supply, together with increases in energy and infrastructure prices, has also led to growth in behind-the-meter energy management and on-site generation solutions. From technology companies powering their data centres with solar panels and wind farms to big-box retailers building rooftop solar and biogas capabilities to power their stores and distribution centres, the number of companies generating their own energy on-site is soaring. We expect supply concerns, energy prices, and the increasing availability of technology and digital energy platforms will continue to channel strong levels of investment in these areas in 2024.

Portfolio optimisation

During times of uncertainty, companies need to reassess their portfolio against their core strategy to make critical decisions about investments. We see portfolio optimisation as continuous practice, but in the current economic environment, it may also be a necessity. Portfolio optimisation can take on many forms, such as a decision to divest or spin off non-core assets. In other cases, assets might be marked for performance improvement to deal with underperformance or to prepare for further economic headwinds.

Global M&A trends in energy, utilities and resources

The energy transition continues to be a primary driving factor for M&A activity in the mining and metals industry, and we expect this to continue in the medium term. Miners are looking to maintain and grow competitive positions and rebalance their portfolios as demand for critical minerals grows. Security of supply and building local supply chains is also a major focus in critical mineral M&A, with supply chain participants becoming more concerned about future supply of critical minerals, leading to trends related to minority investments, joint ventures and partnerships to help share investment risk and secure offtake. Government regulations, which are closely linked to geopolitical risk, will also be a major driver of critical mineral deal activity.

There are some short-term headwinds, including declines in battery commodity prices driven by slower demand from China, current economic and geopolitical uncertainty and a challenging financing environment. We are also seeing some hesitancy in moving forward and completing deals. For those deals that do move forward, M&A processes will likely take longer, with increased scrutiny from investors, governments and other stakeholders.  

While critical mineral deal activity is not immune to the general market decline, the overall M&A outlook remains very positive. Battery minerals such as copper and lithium will continue to be highly sought after. We expect industrial players to increasingly pursue direct ownership or direct offtake arrangements with miners of critical minerals.

Gold miners are also continuing to engage in M&A as a means of building scale, optimising portfolios and unlocking synergies, and we expect to continue to see more consolidation, especially at the mid-tier level.

Commodity volatility, inflation, interest rates and geopolitics are affecting debt availability and will continue to create challenges for oil and gas M&A over the short term. However, many producers have gained significant financial strength in recent years, resulting in lower leverage, large cash pools and improved cash flows. These attributes have historically led to higher levels of M&A activity, and we expect this trend to play out further in 2024.

ESG-centric oil and gas dealmaking in North America has taken a back seat to portfolio optimisation and consolidation as oil majors and other larger producers look to improve their overall asset duration, drilling inventories and production economics. The higher valuations observed in recent North American transactions are expected to continue into 2024. The broad themes of upstream consolidation and portfolio optimisation are global, and we expect these themes to be prevalent in 2024 dealmaking.

Because of the cyclical nature of oil and gas, combined with the transition toward clean energy,  companies will need to balance their M&A activity in a way that allows them to capitalise on high energy prices while taking the necessary steps to transform their business models for the future.

Portfolio optimisation, consolidation and rationalisation strategies continue to be major drivers of M&A among large utilities as companies aim to improve their balance sheets in a sustained high-interest rate environment. Capital repositioning toward energy security continues, particularly in Europe, while in North America, the impact of the Inflation Reduction Act and Infrastructure Investment and Jobs Act continues to spur large utilities’ capital deployment decisions and is leading to strategic positioning by a surge of developers seeking project capital for greenfield projects aligned with the energy transition.

Decarbonisation continues to be a theme of major interest. Some policy uncertainty is creating regulatory headwinds and wariness by large utilities in making major investment commitments. Globally, although capital pools are growing, significant amounts of investment capital remain on the sidelines. 

For utilities, electrification will remain the dominant theme, and we expect it to manifest through continued investment in electric charging stations, electrification of heat, an increased focus on energy storage (particularly in increasingly intermittent power markets), customer-driven initiatives and an increased focus on digital solutions. Throughout 2023, international and national oil companies made multiple public statements about their intent to continue to strategically position themselves and deploy capital aligned with their diversification strategy objectives. We expect this will continue in 2024 and beyond. 

Investments in renewable power will continue, but we anticipate the higher cost of capital and cost inflation will create some headwinds. Although we expect to see sustained and pervasive deployment of solar energy across Europe and the world, we may also see a shift away from a focus on some wind development projects. This pivot away from wind is due to operational factors (such as struggling OEMs, slow grid connection and supply chain issues) and continued economic headwinds. We also expect the divestiture theme related to renewables monetisation by large oil and gas participants to continue in 2024.

Although the chemicals sector fell short of expectations in 2023 as a weaker economic outlook and a subdued COVID-19 recovery in China weighed on global demand, several market dynamics (inflation, feedstock volatility and interest rates) have shown signs of stabilising. These signs, together with forecast increases in production outputs in most major markets, are giving dealmakers reasons to be cautiously optimistic about M&A activity in the chemicals sector in 2024.

We see several factors influencing M&A activity in chemicals. Sustainability objectives will continue to shape the industry in many forms. On the demand side, the energy transition and technologies are linked to improved industrial production for several chemical markets. In addition, circular economy investments are needed to reduce waste and scope 2 and 3 emissions as government regulations and societal expectations prompt chemical companies to accelerate and prioritise their sustainability agendas. 

In the chemicals sector, competitive dynamics among regions will play out through the pursuit of M&A. European assets currently face higher feedstock, energy and carbon costs, while conflicts in Ukraine and the Middle East contribute to continued economic uncertainty. Markets such as in North America and the Middle East, which benefit from access to structurally cheaper feedstocks, may represent attractive investment opportunities. 

Government regulations present both opportunities and challenges, particularly in European carbon markets. In addition to the existing EU Emissions Trading System (ETS), the Green Deal and the Carbon Border Adjustment Mechanism (CBAM) were introduced in 2023 to stimulate investments focused on carbon neutrality and safeguard against carbon leakage. The CBAM will initially apply to imports of certain goods and selected precursors for which production is deemed to be carbon-intensive and at the most significant risk of carbon leakage, including cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. Phasing in CBAM and similar shifts in policy that are starting to emerge in other regions will be an important consideration for dealmakers when assessing value.

2024 M&A outlook for energy, utilities and resources

With significant access to capital, a continued appetite for investment, a drive to accelerate the path to net zero and increased government regulation, we anticipate dealmaking in 2024 will be fruitful in the EU&R sectors. Companies with strong balance sheets will have the most success because economic headwinds will keep some businesses from participating in the short term. For companies or capital pools that have been waiting on the sidelines, the tailwinds for many EU&R sectors are showing signs that 2024 could be the breakout year for transformational deals. Are you ready for it?

For the CEO responses to PwC’s 27th Annual Global CEO Survey, 24% of EU&R CEOs include those who believe their companies are highly or extremely exposed to the risks presented by climate change (including physical risks and transition risks such as risks in policy and legal, markets, technology and reputation) in the next 12 months but do not include responses of “moderately exposed,” “slightly exposed,” “minimally exposed” or “don’t know.”.

We have based our commentary on M&A trends on data provided by industry-recognised sources. Specifically, values and volumes referenced in this publication are based on transactions that have been officially announced, excluding rumoured and withdrawn transactions, as provided by the London Stock Exchange Group (LSEG) as of 31 December 2023 and accessed on 3 January 2024. This has been supplemented by additional information from S&P Capital IQ and our independent research. Certain adjustments have been made to the source information to align with PwC’s industry mapping.

Michelle Grant is the national energy, utilities, mining and industrials deals leader. She is a partner with PwC Canada.

Thanks to the following PwC colleagues for their contributions: Seenu Akunuri, Ajay Amin, Lauren Bermack, Giorgio Biscardini, Jorge Eduardo Campos, Darren Carton, Favian Goitia, Jan Groenewald, Isabelle Gross, Ross Hart, Paul Hennessy, Jason Higgs, Seamus Jiang, Guillaume Laffitte-Rigaud, Rob McCeney, Greg Oberti, Philippe Pourreaux, Joe Rafuse, Daniel Rennemo, Louise Roach, Llewellyn Sterling and Drew Stevenson.

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