Consolidation between oil and gas independents is expected to accelerate as the turn toward an energy transition turns on climate change initiatives, according to research by Wood Mackenzie.

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“A world on a 2 C glidepath does not need thousands of Independents chasing volume,” said consultancy Vice President Luke Parker. 

Oil and gas investors are gravitating toward stable dividends, which are underpinned by, among other things, solid balance sheets and low capital costs, along with top environmental, social and governance, or ESG, ratings. Putting those together, upstream exploration and production companies (E&P) could face existential choices. 

“The independents’ strategies will need to evolve, as they move to minimize risks they can control,” Parker said. “For...