The value of U.S. oil and gas mergers and acquisitions fell to a 10-year low in the first quarter, according to data released on Thursday, as investors pushed shale producers that have driven a recent merger boom to focus on lifting shareholder returns rather than production.
The value of oil and gas deals tumbled plunged 93 percent to $1.6 billion last quarter from a year ago to the lowest in a decade, energy consultancy Drillinginfo said in its quarterly M&A review.
Investors have urged independent shale producers to stop spending on acreage and on corporate deal-making and return cash to shareholders through dividends and share buybacks.
Just seven of 29 independent shale producers last year generated more cash from operations than they spent on drilling and dividends, a Reuters review of financial filings revealed.
“The market for upstream deals came to a halt in late 2018 with the combined pullback in oil prices and equities,” said Andrew Dittmar, a Drillinginfo M&A analyst. By comparison, there were $82 billion in oil and gas deals last year, a four-year high, he said.
So few oil and gas producers have delivered strong returns that the energy industry has lost favor. The sector’s weighting in the S&P 500 index of large publicly traded U.S. companies fell to 5 percent this year from 11 percent in 2012.
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