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First Look - US oil and gas M&A activity to flow into 2025, says EY | Gas falls to month-low as cooler temps reduce cooling demand amid ample supply

Oil prices are slightly lower after yesterday’s rally of more than $2.50/Bbl
- WTI prices posted significant gains yesterday after the shutdown of oil production in Libya added to ongoing risks in the region
- A top U.S. general said on Monday that the danger of a broader war had eased somewhat but that an Iran strike on Israel remained a risk
Canadian crude displacing Latin American crudes on the West Coast (Argus)
- Refineries on the US West Coast are switching to cheaper Canadian crude now that the Transmountain pipeline is online, reducing their reliance on Latin American crudes
- Between May and July, combined US west coast imports of Medanito, Vasconia, Napo, and Oriente fell by 20%, while imports of Canadian crude more than doubled
DOE purchases crude for SPR (Argus)
- President Biden's administration signed contracts to purchase nearly 2.5mn bl of sour crude for the SPR's Bryan Mound storage facility in Texas
- The crude was bought at an average price of $72.85/bl, the lowest since June 2023
- Since last year, DOE has signed contracts to buy 47.2mn bl of crude at an average price of $76.89/bl and still has over $1bn available

Gas prices hit their lowest in nearly a month as forecasts show cooler temperatures across most of the US, reducing cooling demand amid ample supply
- Prompt gas was 3.9c lower to $1.917/MMBtu (As of 7:45 AM)
- Winter ‘24/’25 strip is down 1.9c to $3.028, and the Summer ’25 strip is down 0.7c to $3.082
- Today's European Ensemble shifted cooler east of the Rockies with significant temperature drops in the 1-10 day periods, while the 11-15 day period reverts to the 10-year normal. (Criterion)
US oil and gas M&A activity to flow into 2025, says EY (S&P Global)
- US oil and gas M&A activity is expected to continue throughout 2024, with a pause during the fall for the US elections, before accelerating in 2025, focusing on non-core asset deals, according to consulting firm Ernst and Young
- EY's study highlights that deals will likely involve more asset transactions rather than corporate takeovers, as companies quickly divest non-core assets
- The US offers a favorable regulatory environment for M&A, with easier deal execution compared to global locations, and assets in the US shale sector are particularly attractive due to their ease of packaging and sale, added EY’s Bruce On
- Industry consolidation could drive increased midstream capital spending, as larger operational positions in key areas like the Permian Basin make infrastructure investments easier and more commercially viable