Global oil and gas dealmaking has remained fairly resilient even when pressured by commodity pricing, and transactions now may extend beyond the Permian Basin’s core, as well as into the Niobrara formation and Bakken Shale, said Raymond James & Associates analysts.

The long-term trend “shows an industry preference for asset deals” as the industry moves toward more capital discipline, said analysts Pavel Molchanov, John Freeman and Muhammed Ghulam. They issued a note to clients on Monday about the previous trends and what they predict going forward.

If oil prices trend higher in the next one to two years, the merger and acquisition (M&A) “hot spots” likely will be higher-cost and/or higher-risk areas, which in the United States could mean beyond the Permian core.

“The bulk of the Permian deals in recent years have focused on the Midland and Delaware basins,” said analysts. “Looking ahead, we envision activity picking up in the Central Basin Platform, especially the northern portion, an area that has historically had relatively little development.”

In addition, the Niobrara formation and the Bakken Shale “should see renewed interest once the industry feels comfortable in the durability of $50/bbl West Texas Intermediate.”

Analysts used a holistic approach to analyzing deal flow worldwide to view what has happened in recent years, looking at every global upstream-focused deal from 2005 to today with a value of $1 billion and higher, using data supplied by IHS Markit.

Each transaction was placed into either the corporate or asset category. Corporate M&A represents buying an entire enterprise, or a partial equity stake in an enterprise while asset M&A relates to individual properties (producing or nonproducing), a package of properties, or a volumetric production payment.

“Even in 2016, the year when oil bottomed below $30/bbl, M&A was roughly at the levels of 2011 and 2007, both strong years in the oil market,” said Molchanov and his colleagues. “By contrast, global capital spending in 2016 was at barely half the level of 2011!”

There may never be a return to the record $200 billion-plus boom years of 2012 and 2013, but with $120 million year-to-date, 2017 is tracking to be the first year for M&A increases since 2013. This year also may be the fourth of the past six with asset M&A making up most of the transactions.

Conventional wisdom is that the energy industry is interested only in U.S. opportunities, but the Raymond James team found the geographic footprint actually is highly diverse, at least among the $1 billion-plus transactions. What may appear skewed is that the Permian Basin takes a lot of the spotlight.

“The Permian may be the only basin globally where valuations have actually increased as oil prices fell by half from their peak 2013-2014 levels,” analysts said. “Bearing this in mind, along with the market’s overall fixation on everything shale (less than 10% of global supply gets perhaps 90% of the investor attention), conventional wisdom seems to think that the U.S. accounts for a large majority of global M&A.

“The reality is quite different.”

The U.S. percentage of global M&A actually has not trended higher in the past decade or so, with the “norm” around 20-30%.

“Interestingly, the two years with the lowest U.S. percentage (8% in 2013 and 2015) were both quite recent.” The outlier in 2015 was the mega-merger between two European majors, Royal Dutch Shell plc and BG plc.

“To be sure, the U.S. is generally ‘punching above its weight’ in terms of M&A, relative to its proportion of global oil production or capital spending,” said analysts. “As to how any given player approaches its decision to increase or decrease U.S. asset exposure, that is a highly individualized matter.”

Generally, U.S. operators with an international footprint have become more domestically oriented, including ConocoPhillips, Anadarko Petroleum Corp. and Marathon Oil Corp., while operators not based in the United States, including Shell and BHP Billiton, “have sourced on their previous efforts to build a U.S. onshore business.”

U.S. offshore dealmaking is nearly stalled, according to a recent analysis by IHS Markit. While overall U.S. energy M&A increased during the third quarter, total value fell substantially as operators sought smaller, bolt-on acquisitions and went hunting outside the Permian for the first time in months, PwC said in a third quarter review. PwC said three transactions were completed in the Permian worth $1.48 billion, with the Anadarko Basin reporting the most active unconventional dealmaking with six transactions worth $3.94 billion total. Five deals each also were made in the Bakken for $4.86 billion total, and in the Eagle Ford Shale, worth $698 million total.