North American upstream merger and acquisition (M&A) activity accelerated in the first half of this year from a year ago, dominated by onshore tight oil transactions in the United States, according to BMO Capital.

M&A activity in the United States and Canada combined totaled $67 billion for the first six months of 2014 (1H2014), versus $55 billion in the first half of 2013 (1H2013), said analysts Randy Ollenberger and Jared Dziuba. North America's upstream activity accounted for 64% of global deal flow versus only 43% in 2013, fueled by improved access to capital and continued success in the U.S. tight oil plays.

Tight oil activity in the United States alone has accounted for $54 billion of M&A transactions this year, compared with $46 billion in 2013. Most of the activity remains focused through the rest of the year on tight oil deals in the Permian Basin, the Niobrara formation, and the Bakken and Eagle Ford shales, the analysts said.

Through June, global upstream M&A totaled $105 billion, slightly below $128 billion for full-year 2013, and on pace to meet or exceed the three-year average of $153 billion, according to BMO's calculations. Deal flow outside of North America has been "muted," the analysts said.

North America's median deal size is higher too, "suggesting a fairly robust investment undercurrent. We believe recent consolidation trends are indicative of the robust health of the oil and gas industry and [we] expect additional, albeit more measured, M&A activity to continue in select regions through 2015."

If U.S. dealmaking were to continue at its current pace through 2014, it should surpass the 2012 record of $76 billion.

"In our view, the opportunity set has narrowed due to stretched corporate and asset valuations, which could slow the pace of deal flow into 2015. That said, we expect additional selective transactions could transpire as companies seek to replenish drilling inventories to maintain growth profiles, as well as improve capital efficiencies through economies of scale," the analysts said.

M&A dealmaking in North America may slow in 2015 in some of the more saturated, consolidated areas. However, not so in the robust developing areas of the U.S. onshore, according to BMO.

"We believe the most significant opportunities exist in the Permian and Niobrara, given relatively early stage development (room for improvement), fragmented ownership and high resource development upside relative to current production," wrote Ollenberger and Dziuba. "We see some additional, albeit lower probability, potential in the Eagle Ford and Bakken/Three Forks. Other emerging plays including the Tuscaloosa Marine Shale and Eaglebine remain in early stages of exploration, but with ongoing success could become the source of emerging consolidation efforts."

For Canada, analysts expect more consolidation in conventional opportunities as they see better access to capital and a "growing list of new consolidators, as well as an increase in select resource play activity with focus on the Duvernay and Bakken/Torquay." Still, they noted the absence of M&A in the oilsands, most likely on "the combination of changes in Canadian federal takeover regulations, as well as ongoing concerns regarding market access. Valuation remains the larger question, as buyers may demand discounts to compensate for higher regulatory uncertainty."