Baytex deal could signal incoming US M&A wave

Bumper cash flows along with diversification and consolidation strategies set stage for dealmaking

Oil and gas producers are primed to take advantage of huge profits and global economic uncertainty by ploughing their cash into the US M&A space. The firms’ newfound ‘war chests’ allow them to hunt for deals even with competing priorities of capex reinvestment, debt reduction, energy transition considerations and immediate shareholder returns. One of the major recently announced transactions—Calgary-based Baytex Energy’s move to acquire US independent Ranger Oil—illustrates some of the dynamics: diversification from single shale plays and building out a pipeline of new revenue streams, with the longer-term aim of more reliable payouts to investors. Not everyone agrees that Baytex’s