Nearly half of the U.S. oil and natural gas merger and acquisition (M&A) activity during the third quarter was driven by shale plays, according to the latest survey by consultancy PwC US.

Overall, domestic M&A activity climbed 135% in the latest period from the same period a year ago, PwC found. The consultant’s Oil & Gas M&A analysis is a quarterly report of announced U.S. transactions with values more than $50 million that were analyzed using transaction data from IHS Herold.

According to PwC, 13 deals whose values were more than $50 million related to shale plays during the quarter, totaling $22.6 billion, or 46% of total deal value. Included in those transactions were four involving the Marcellus Shale that totaled $3.6 billion and four Utica Shale deals with a total value of $3.1 billion.

“Shale gas assets continue to attract vast interest from oil and gas companies with five of the top 10 largest deals in the third quarter involving shale plays,” said PwC’s Steve Haffner, a Pittsburgh-based partner in the energy practice. “In the Marcellus Shale we’re seeing steady activity among the corporates despite the continued weakness of natural gas prices, including new players entering and existing companies expanding acreage.

“Interest in the Utica Shale also continues to build each quarter as companies are attracted to the potential for a stacked play and the cost savings associated with shared infrastructure given its proximity to the Marcellus.”

Forty-six transactions valued at more than $50 million were announced between June and September, which accounted for $48.8 billion in total deal value — up from $20.8 billion during the same period in 2010, the survey found. The average size of a transaction rose to $131 million from $117 million, driven by 23 large transactions valued at more than $250 million.

Fifteen corporate transactions with values of more than $50 million generated 89%, or $43.4 billion, of total quarterly value — a 411% increase from a year ago. Thirty-two asset deals worth more than $50 million contributed $14.7 billion, compared to the same number of asset deals with a combined value of $12.4 billion seen a year earlier.

And it’s not predicted to slow down anytime soon.

More deals? “Absolutely,” PwC’s Rick Roberge, a principal in the energy M&A practice, told NGI’s Shale Daily on Wednesday. “Despite the volatility, it doesn’t necessarily mean money is going to be stalled. Looking at commodity prices, oil is volatile, gas is flat and the equity markets are volatile, but you know, there’s still an appetite to do consolidation in this industry.

“It’s driven by an intense interest in getting a position in the shale plays. And the longer-term players, the larger companies, those with big pockets, they have no problem doing gas deals. They can wait it out for years. And the smaller companies are doing oil deals,” he said.

“It’s a very deal-focused industry.” When there is volatility in the markets, sellers and buyers usually have trouble getting deals done. “That’s not happening at the moment. Sellers see volatility and if they can get reasonable value, buyers and sellers are able to get together and do a deal.”

Private equity was a deal-maker in the latest quarter, along with international oil companies (IOC) and other big pocket producers, which found no trouble completing transactions, said Roberge.

The U.S.-based majors and Europe oil giants “clearly have always cooperated…They have to get access.” A few years there was a belief that IOCs were “dying” because of a lack of discoveries, he noted. “It’s just not happening, they aren’t dying. If you are able to find U.S. shale, it’s a whole new play. They still are finding oil and gas in most of the frontier places — [and] in places that aren’t frontier places. And that’s not stopping anytime soon.”

Beyond the shale, “in the deepwater Gulf of Mexico there have been tremendous finds; two since Macondo,” said Roberge. “I just think there’s no wedging out IOCs. They have opportunities out there. They have to keep grinding and pushing.

Roberge said there were “headwinds” in 3Q2011 related to volatility and commodity prices, but companies continued to take “advantage of opportunities in shale to gain technology know-how and diversify service offerings. Large multinational corporations are able to withstand market volatility, and we’re continuing to see them push through and get deals done — with their focus primarily in the upstream sector and shale-related plays.”

As the space evolves, Pwc continues to see “private equity look to energy deals,” he said. “With financial sponsors making inroads and corporates very focused on oil and maximizing the value of current assets, we expect energy to remain one of the hottest sectors for deals.”

For transactions valued at more than $50 million, upstream deals made up 52% of activity in 3Q2011 with 24 transactions accounting for $28.1 billion, or 57% of total quarterly deal value, the survey found. Oilfield equipment followed with 12 transactions totaling $7.3 billion, while four midstream deals contributed $10.4 billion. There were six downstream deals with a total value of $3.1 billion.

For transactions valued at more than $50 million, foreign buyers announced 22 deals between June and September, which contributed $37.3 billion, or 76% of total deal value. Compared with the same period of 2010, activity was about the same, but the value of deals jumped 185% during the latest period from $13.1 billion a year ago. Additionally, two financial sponsor-backed transactions were more than $50 million, representing $653 million, a decline from the eight deals that totaled $2.2 billion during the same period last year.

Since the end of September one thing has changed, Roberge noted. “The high yield window has closed” and the initial public offering (IPO) window “is kind of closed. What that means is that private equity deals are going to slow down but if an IPO is not available, you’ll see companies doing other strategies…splitting, selling…those two windows.

“If you are large and have a big balance sheet, those large companies have patience. They’re not worried about the current market, the current price of gas. They have a 10-year window, which has priced a lot of the little companies out of the market. A little bit of competition is gone.

“You are going to see more deals. What the low gas prices are is one thing. If you’re small and very leveraged to gas prices and your hedges are rolling off, you have to take a serious, strategic look…You don’t want to sell at the bottom but scenarios for $4 gas are for an extended period of time. And there’s volatility in oil prices…and that volatility alone has people looking at various scenario planning, and what that means is, consolidation is inevitable.”

Private equity has slowed a bit because of high yield but it hasn’t affected the foreign players, said Roberge. The Asian players, he noted, “have no cost to capital. They are still seriously looking at situations where volatility is tough for some but if you are big and well financed, you can laugh.”