As global energy demand continues to rise, oil and gas companies recognize the need to build assets and capabilities in both clean and traditional energy. We believe there are distinct investment areas that energy companies should consider when diversifying their portfolios: oil, gas, hydrogen, biofuels, and carbon capture, utilization and storage (CCUS).

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The changing roles of M&A

In today’s uncertain energy market—characterized by rising interest rates and price volatility1—merger and acquisition (M&A) activity is showing signs of slowing down. It’s easy to understand why. In this environment, inorganic growth must be clearly targeted and focused on shareholder value above all else. A review of energy sector M&A approaches over the past decade sheds light on four distinct inorganic growth pathways energy companies should consider. We believe that understanding these pathways will help today’s oil and gas leaders select (and blend in the right proportions) the approaches that are best for their businesses.

The four inorganic growth pathways include: 

  1. The Protector, involving acquisitions of traditional upstream/downstream oil and gas assets to create an optimized portfolio comprising the highest-value fields and reserves.
  2. The Architect, involving acquisitions of low-carbon portfolio assets, including renewables, hydrogen and biofuels (or even expanding into petrochemicals) to help design the new energy economy.
  3. The Ecosystem, involving the pursuit of venture capital deals beyond traditional company or asset acquisitions to include leading-edge technologies such as carbon capture, utilization and storage (CCUS).
  4. The Builder, involving the creation of an integrated gas supply chain infrastructure, including liquified natural gas (LNG) terminals and gas storage.

Inorganic oil and gas growth pathways: 2010-2021, by number/value of transactions 

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Growth pathways by number and value

Source: Accenture Research Growth Pathways Model 2022, N=~3000 M&A and venture capital (VC) deals, excluding OFES providers.

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The Protector pathway is dominant, reflecting the industry’s move toward consolidation with a focus on optimizing traditional oil and gas portfolios. It is typically characterized by independent upstream companies adding compatible assets and by private equity companies acquiring assets from large operators whose portfolio costs are under scrutiny. Others following this pathway include integrated oil companies (IOCs), which are creating more balanced portfolios by adding oil and gas assets, for example with geographical proximity to their existing low-carbon resources. By no means is the protector pathway about protecting unsuccessful portfolios; it is about protecting the portfolio’s overall competitiveness to drive future growth.

The Architect is the second most common pathway to inorganic growth. It typically focuses on major incursions into the low-carbon economy or otherwise outside the traditional oil and gas sector. Representing a proportionally higher share in terms of value than number of deals, this pathway is characterized by oil and gas companies acquiring majority or minority stakes in companies undertaking capital-intensive projects in the areas of renewables, hydrogen, other low-carbon infrastructures and, to a lesser extent, petrochemicals. The sector can also utilize the new capabilities acquired in this pathway to support other heavy industries in their decarbonization journeys.

The Ecosystem pathway supports the low-carbon economy with earlier-stage VC investments—for example, in CCUS. This path is likely to lead to subsequent M&A opportunities in maturing technology markets. Ecosystem and Architect pathways demonstrate how oil and gas companies are applying traditional capital project infrastructure capabilities to co-create the new energy economy. Amid ongoing industry convergence, their investments materialize as new technologies mature.

The final pathway to inorganic growth is a Builder. Supporting midstream infrastructure, Builder deals are focused on constructing integrated gas supply chains, including LNG terminals and gas storage. Such deals typically have a higher average value than deals pursued in the Protector pathway. But both address the imperative to ensure energy security (accessible energy at affordable costs), as well as energy sustainability (decarbonization of oil and gas operations). Both are focused on protecting and building the competitiveness and cashflows of the overall company portfolio during the energy transition.   

The aforementioned growth pathways will differ by type of company. The representation of international oil companies (IOCs), national oil companies (NOCs) and independents will vary in each pathway, as will the implications of their pathway choice. This is especially true for oilfield equipment and services (OFES) companies with a strong focus on building leading-edge technology capabilities.  

Shareholders reward energy security and strategic clarity

Shareholder reactions to the pathways have shifted over the past decade. Historically, the Architect pathway, which deals especially with low-carbon initiatives, has had a more positive effect on the acquiring oil and gas company’s stock price. However, in the past two years, we’ve observed above-average investor rewards going to more traditional deals. Specifically, companies pursuing a Protector pathway in the 2019-2021 period witnessed a particularly strong stock price impact.

Impact of deal announcements on stock price, for selected pathways

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Deal announcements directly impact shareholder sentiment, suggesting increased emphasis on energy security

Source: Accenture Research Growth Pathways Model 2022, focusing on N=~1,200 M&A deals from top O&G companies based on market capitalization, excluding OFES providers. 

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This shift in shareholder sentiment signals an increasing emphasis on the security of energy supplies. That trend is expected to continue in the medium term. However, as the world’s supply-demand balance for conventional energy stabilizes in a more moderate commodity price environment, the growth of the low-carbon economy and related M&A value is likely to attract renewed investor attention. In fact, we believe interest in low-carbon pathways over the coming years will outpace what we’ve seen in the past decade.

Importantly, it’s not just the inorganic pathways that counts. Also critical to investors are the strategic drivers behind each deal. We discovered a disproportionately high number of deals across the pathways focused on “extending existing capabilities” by, for example, buying new plants to expand production capacity for market share and economies of scale. In contrast, a relatively small number of deals focused on entering/expanding in a new geographic market or acquiring new technology. Yet those deals demonstrated above-average market rewards. This may be due to the fact that such expansion strategies appeared clearer and more focused to investors. Less can be more.

Comparison of strategic deal drivers in the oil and gas industry, 2010-2021

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The impact of deals on stock price by deal driver

Source: Accenture Research Growth Pathways Model 2022, focusing on N=~1,200 M&A deals from top O&G companies based on market capitalization excluding OFES providers. 

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Growing up (and out)

We believe oil and gas companies looking to pursue inorganic growth strategies should take the following three steps:

  • Envision a clear and balanced traditional/low-carbon portfolio. When carrying out long-term portfolio scenario planning activities, companies should balance the financial gains, portfolio CO2 footprint/costs, and the environmental, social and governance (ESG) impact of the selected assets/companies.
  • Target 360° deal value. Companies should look beyond maximizing a deal’s potential financial value. They need to also optimize their operating models to ensure a smooth transition in customer experience, workforce integration and societal impact—all while communicating their intentions clearly to all stakeholders.
  • Identify integration challenges early. Artificial Intelligence (AI) can help companies understand the potential impact of their deals at a granular level—from selecting assets/fields to executing the deal. That understanding can make it much easier to anticipate potential integration issues and prevent (or minimize) them. Also, Incompatibility and scalability issues make integrating technologies across the transaction parties the top post-M&A challenge. Understanding and mitigating that challenge early is critical for long-term deal value.

These steps will serve energy companies well—regardless of the pathway they choose.

We’d like to thank Marnus Witte and Abira Sathiyanathan for the key contributions in this analysis.

Disclaimer:  The views and opinions expressed in this document are meant to stimulate thought and discussion. As each business has unique requirements and objectives, these ideas should not be viewed as professional advice with respect to the business. This document may contain descriptive references to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks


1“Energy Deal Activity Slows -- Market Talk”, Dow Jones Institutional News, 1 Aug 2022,

Gregg Albert

Managing Director – Accenture Strategy, Mergers & Acquisitions

Lasse Kari

Senior Principal – Accenture Research, Energy

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