M&A Sector Spotlight: Energy and Natural Resources

M&A activity in the energy sector in 2025 reflects a market in transition—where traditional oil and gas players, renewable developers, and utilities are each recalibrating their portfolios to balance resilience with long-term transformation. The survey findings reveal a sector marked by strategic discipline, selective dealmaking, and sector-specific optimism.

Overall Market Sentiment

A strong majority (70%) of energy respondents expect the M&A market to strengthen over the next 12 months, with only one respondent anticipating a decline. This optimism is rooted in the sector’s evolving fundamentals, including rising energy demand, infrastructure modernization, and the strategic repositioning of assets.

Do you believe current asset valuations are…?

How has your M&A strategy shifted since the beginning of the year in response to macroeconomic conditions?

Oil & Gas: Consolidation with Discipline

Respondents anticipate continued deal activity in oil and gas, driven by the need to secure reserves, optimize portfolios, and reduce operating costs. While 2024 saw record-setting deal values, 2025 is characterized by greater selectivity amid price volatility and valuation mismatches. Quotes from respondents highlight this shift:

  • “Low-ish oil prices will strain cash flows. Larger firms will look for quality targets to grow.”
  • "Product prices dropping will force some operators to divest.”

Natural gas is emerging as a focal point, with buyers targeting gas-heavy assets serving domestic and international markets. The strategic thesis is shifting from volume growth to portfolio optimization, with M&A used to sharpen asset mixes and hedge against demand uncertainty.

Renewables: Selectivity Amid Transition Capital

  • While renewable energy remains an opportunity area, its prominence has declined slightly compared to 2024. Respondents are more measured in their approach, citing permitting delays, financing challenges, and policy complexity. Still, optimism persists:
  • “Strong opportunity and preferences for developing renewable energy resources, combined with new technologies.”
  • “Rising clean energy demand and need for grid updates.”

The influx of transition capital—from infrastructure funds and institutional investors—is enabling consolidation of smaller developers and integration of renewables into larger platforms. M&A in this space is increasingly focused on bankable, execution-ready projects with long-term contracts.

Power & Utilities: Infrastructure Modernization

The electric and utilities subsegment is expected to drive deal activity, reflecting the urgent need to modernize aging infrastructure and support rising demand from AI, data centers, EVs, and reshoring of U.S. manufacturing. Respondents noted:

  • “Need for grid stability. Favorable tax treatment.”
  • “Will lead transactions in energy and natural resources due to the growing demand for energy and the need to modernize existing infrastructure.”

Strategic buyers and infrastructure funds are targeting regulated utilities that offer steady cash flows and support electrification, distributed energy resources, and grid modernization. For many utilities, M&A is a defensive strategy to secure capital, ensure compliance, and maintain relevance. Faced with rising inflation, tariffs, and multi-year lead times for critical infrastructure components—often stretching 3 to 5 years—many established utilities are turning to mergers and acquisitions as a more cost-effective and timelier alternative to building from scratch. Beyond speed and cost, M&A also offers greater budget certainty, allowing utilities to lock in known asset values and avoid the unpredictable expenses and delays associated with large-scale capital projects in today’s volatile economic environment.

Strategic Shifts in M&A Approach

Energy respondents reported shifting their M&A strategies in response to macroeconomic conditions. These responses below reflect a disciplined, forward-looking approach, where dealmakers are prioritizing resilience, operational efficiency, and future-readiness.:

  • “Tariffs are a deal changer… all components are now subject to new tariffs.”
  • “Shifted to focus on selective deals due to market change.”
  • “Economic conditions are improving and will continue to improve.”
  • “Deploy capital for strategic purposes.”

 

Wilhelm E. Liebmann   

“Energy M&A in 2025 is defined by quality over quantity. Buyers are more disciplined, regulators more involved, and investors more focused on long-term fundamentals. Whether in oil and gas, renewables, or utilities, dealmaking is being used not for opportunism, but for strategic repositioning—to build portfolios that are resilient today and transformative tomorrow.”

Wilhelm E. Liebmann
Dykema Member