Dealmaking in the U.S. upstream oil and gas sector surged to $38 billion in the first quarter of 2026, the highest quarterly total seen in two years, analytics firm Enverus reported on Wednesday.
The standout transaction was the merger between shale producer Devon Energy and smaller peer Coterra, a tie-up that closed last week after being announced in February. Valued at $25 billion, that transaction accounted for the majority of first-quarter deal value. Both companies have operations across multiple shale formations, including positions in the Delaware portion of the Permian Basin spanning Texas and New Mexico, as well as in Oklahoma's Anadarko Basin.
While Q1 aggregated deal value was elevated, activity decelerated sharply in March. The slowdown followed a spike in crude price volatility after U.S.-Israeli strikes on Iran in February, which precipitated a broader Middle East conflict and disrupted commercial shipping through the Strait of Hormuz. Since the onset of the conflict on February 28, the global benchmark Brent crude futures moved between a low of $77.74 a barrel and a high of $118.35.
Enverus flagged that higher oil prices are likely to encourage a rebound in mergers and acquisitions. Higher prices can make private exploration and production companies more willing to sell assets and sustain a continuing wave of consolidation among public and private firms, according to the analytics firm.
"The market entered a temporary holding pattern as volatility clouded the outlook for oil prices, but the case for higher-for-longer oil prices is strengthening and creating the setup for an M&A rebound," said Andrew Dittmar, principal analyst at Enverus Intelligence Research.
Other notable activity in the quarter included Mitsubishi's acquisition of Aethon Energy for $7.6 billion, which the Japanese company described as its largest deal to date as it seeks to bolster its gas supply chain.
As reported by Enverus, the first quarter's elevated aggregate reflects the impact of a single large transaction alongside several other significant deals, while market participants remained cautious amid geopolitical-driven price swings. Enverus sees the strengthening case for sustained higher prices as the principal factor that could revive deal flows that paused during March's heightened volatility.
The quarter's dynamics underscore how geopolitical events and crude price movements can compress transaction windows, even when headline deal totals are high. Analysts and dealmakers will be watching price trajectories and operational considerations for private sellers and public buyers as potential catalysts for a renewed round of consolidation and asset sales.