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Dealmaking has cooled in the US upstream market amid tariffs and Opec+ supply boosts

M&A activity stalls in the US oil patch

Dealmaking has become pretty quiet down here in Houston. What is going on right now in the oil patch is what we call in Texas a Mexican stand-off. Everyone has their guns pointed at each other, and no one wants to draw first. Or in terms of the oil and gas market, sellers are worried about selling too low and buyers are worried about overpaying.

“It’s harder to get things done now because of the spread between bid and ask,” said Patti Melcher, founder and managing partner of EIV Capital, a private equity firm that supplies growth capital.

Lower oil prices, which are down by 14 per cent since the start of the year amid tariffs and Opec+ supply boosts, have trimmed buyers’ ability to continue to pay heavy valuations. Sellers, who know good assets are in short supply, are also reluctant to offload those properties at a discount.

The value of US upstream M&A reached $17bn in the first quarter of 2025, the second-strongest start to the year since 2018, according to Enverus Intelligence Research. However, nearly half of that amount came from two deals by Diamondback Energy. Dig a little deeper, and deals have slacked off since their high point of $144bn in the fourth quarter of 2023.

“Upstream deal markets are heading into the most challenging conditions we have seen since the first half of 2020,” said Andrew Dittmar, principal analyst at Enverus. “The stand-off between those two groups around fair asset pricing is set to sink M&A activity.”

Since the start of 2014, crude prices have fallen by more than 5 per cent quarter-over-quarter 17 times. In 11 of those quarters, deal activity decreased with an average decline in value of 30 per cent, according to Enverus.

Deals usually take three to six months to complete, lawyers say, so those currently being worked on started late last year. Most deals have slowed in 2025 and the pace is a shadow of previous years. Overall upstream M&A peaked at $192bn in 2023, before dropping to $105bn in 2024.

Before the collapse in oil prices this year, prices for good quality assets were steadily increasing. Oil-weighted properties were set to hit their fifth straight year of rising prices until President Donald Trump’s “liberation day” tariffs put the brakes on them. 

The Permian Basin, the most prolific oilfield in the country, accounting for 51 per cent of total US output, has been the star attraction for acquisition activity because of the high-quality inventory and strong returns. But most of the best properties have been bought and are largely controlled by the big publicly traded companies.

What’s left on the market is expensive and that has pushed some buyers to look outside the Permian to mature and emerging plays. Last week, shale pioneer EOG Resources, which hasn’t made a significant deal in almost a decade, snapped up Encino Acquisition Partners for $5.6bn to expand its exposure in the Utica shale in Ohio.

“This acquisition combines large, premier acreage positions in the Utica, creating a third foundational play for EOG alongside our Delaware Basin and Eagle Ford assets,” said Ezra Yacob, EOG’s chief executive and chair.

With lower crude prices, M&A activity is moving towards natural gas-weighted prospects to take advantage of the increase in demand for LNG and the AI-fuelled data centre boom.

The Haynesville Shale, which straddles Louisiana, Texas and Arkansas, is the most attractive to buyers because of its proximity to LNG export facilities on the Gulf Coast. “The question now is how do we pivot to something outside of oil,” said Mari Salazar, senior vice-president and director of energy banking at BOK Financial.

Private equity groups, buoyed by recent sales to public companies, are expected to increase their purchases this year if crude prices firm. “The influx of capital has come back. Most of our investors don’t worry about volatility so long as we generate returns,” said Billy Quinn, managing partner of Pearl Energy Investments, a Dallas private equity firm.

Family offices, attracted by the traditional long-term returns of the energy sector, are also entering the space to diversify their holdings. “These families want to play and invest where institutional capital is flying away,” said Brad Nelson, managing director at investment bank Stephens. “We’re in the early stages of them coming into the space. This isn’t a fad.”

A New Shot Prevents HIV—and Breathes New Life Into a Stagnant Biotech

After years of stagnation, Gilead is betting that a twice-yearly HIV shot can restart its growth engine

Later this month, the Food and Drug Administration is widely expected to approve a groundbreaking twice-yearly injection to prevent HIV—a milestone in the decadeslong fight against a once-devastating disease.

For Gilead Sciences GILD -0.28%decrease; red down pointing triangle, the dominant player in HIV treatment, the breakthrough is doing what years of splashy but underwhelming acquisitions failed to achieve: It has Wall Street paying attention again. Since reporting last June that just two annual shots of lenacapavir prevented all HIV infections in a study of women and girls, shares have surged 73%.

Gilead still isn’t very expensive: It trades at 13.3 times forward earnings—below the industry average of 14, as measured by the NYSE Arca Pharmaceutical Index, and hardly a stretch for a company on the cusp of a new product cycle.

Investors might fear they have seen this movie before. A decade ago, Gilead stock soared on excitement over its hepatitis C cure, only to stall once most patients had been treated and the market dried up. The company then fell into value-trap territory, weighed down by sluggish growth and a string of underwhelming cancer deals.

This time could be different—but only if Gilead can execute. Over 400,000 people in the U.S. are currently on pre-exposure prophylaxis, or PrEP—a medication that protects against HIV infection. To hit the $4 billion in annual sales that some analysts are forecasting by the end of the decade, the company will need to not only convert a big chunk of existing patients but also expand the overall market both at home and abroad. Gilead expects the number of users in the U.S. to grow to over one million in the next decade.

The early signs are promising. For starters, the market is growing fast. Sales of Gilead’s daily pill Descovy rose 38% last quarter from a year ago, while GSK’s Apretude—a long-acting injection given every two months—jumped 63%. Secondly, many current and potential users say they would prefer a longer-acting injection. A Jefferies survey of more than 500 PrEP users found that 95% would switch to a twice-yearly injection.

In an interview, Gilead’s Chief Commercial Officer Johanna Mercier said the key advantage of the company’s upcoming HIV prevention shot isn’t just efficacy but adherence. “We know it’s challenging to take a daily pill for prevention, and we see an incredible opportunity here,” she said, citing data showing that many patients struggle to stay consistent with oral PrEP.

Still, hurdles remain. Stigma continues to hinder PrEP uptake, particularly outside the core demographic of white men who have sex with men. Black Americans account for 39% of new HIV diagnoses but just 14% of PrEP users. Expanding access to underserved populations will require continued insurance coverage. While most current users are covered by commercial insurance, Medicaid will be key to reaching lower-income groups—making recent GOP proposals to cut the program a potential threat to Gilead’s growth strategy.

Another risk, according to RBC Capital Markets analyst Brian Abrahams, is cannibalization. Gilead’s daily pill Descovy currently accounts for 40% to 45% of the PrEP market, so some of the lenacapavir growth could come at the expense of its existing business.

But Mercier is confident the new product will expand the market both in the U.S. and globally. Gilead is working with governments in countries such as the U.K., where PrEP awareness is low, and planning broader rollout in low-income countries through partnerships with global health organizations. “We’re thinking globally about the public health impact we can have,” she said.

Gilead’s growth outlook means it is, for now, steering clear of the patent cliff that is about to hit much of the industry as multibillion-dollar blockbuster drugs face generic competition. Gilead’s HIV blockbuster, Biktarvy—which is prescribed after infection—retains exclusivity until 2033, with several potential successors already in the pipeline.

Beyond HIV, Gilead is beginning to show signs of turning the corner in cancer, a space where past acquisitions have frustrated investors. There is growing excitement around Trodelvy—an antibody-drug conjugate acquired via its $21 billion Immunomedics deal—after data showed it delayed progression in an aggressive form of breast cancer when combined with Merck’s Keytruda. Meanwhile, Gilead’s cell therapy program is gaining traction, with the company aiming to challenge Johnson & Johnson in the multibillion-dollar multiple myeloma market, explains Traver Davis, a healthcare strategist at Citi.

“They have been hammered for their acquisitions and execution on the oncology side of the business in the last few years,” said Davis. “The narrative on that is definitely turning.”

Gilead spent years trying to move beyond HIV. In the end, it might be HIV prevention that finally delivers the breakthrough investors have been waiting for.

Trading house reports interim profit of $1.5bn and pays out same amount in dividend to its 1,400 employee shareholders

Global commodities trader Trafigura has warned “turbulence” in the market would extend into the second half of the year as geopolitical uncertainty, higher tariffs and inflationary pressures take their toll on the industry.

The trading houses that move raw materials around the world have responded to the whiplash of US policy pronouncements and sudden changes to proposed trade tariffs, which have triggered huge flows of commodities into the US.

Chief executive Richard Holtum this year said he was “semi-seriously” considering changing the working hours of its Switzerland-based traders to 2pm to midnight, to better deal with President Donald Trump’s frequent social media posts. 

Despite the uncertainty, Trafigura reported net profit of $1.5bn in the six months to March, on par with the same period a year earlier, in its first-half results published on Thursday.

The company also paid out a $1.5bn dividend to its 1,400 employee shareholders in the period, an increase from $650mn paid out during the same period a year earlier.

Trafigura’s profits — like those of other trading houses — have declined from the record highs made during the energy crisis of 2022 and 2023, but remain elevated compared with historic norms.

The outlook for the remainder of the financial year was less rosy, according to the company’s executives.

“The word of the second semester is ‘uncertainty’,” chief financial officer Stephan Jansma said in a video published on Thursday. “Uncertainty in terms of commodity prices, interest rates, tariffs.” 

“We anticipate further market turbulence in the second half of the year,” he wrote in the earnings report.

Unlike in traditional supply-demand market disruptions — normally an environment in which commodity traders thrive — the current market movements are driven by policy decisions and are much harder for traders to anticipate.

“Increased volatility may not necessarily translate into physical trading opportunities,” Jansma wrote, adding the company was “well placed” to deal with the uncertainty.

Trafigura’s chief economist Saad Rahim was more downbeat, saying “current conditions are marked by significantly higher tariff levels, rising inflationary pressures, weak consumer sentiment and spending, bond market concerns over mounting government debt [and] the risk of disorderly sell-off in the US dollar”.

“This is clearly a volatile environment and not one that supports strong commodity demand,” Rahim wrote.

Trafigura is recovering from setbacks, including a high-profile corruption trial last year, and the revelation that it faced a $1bn loss after uncovering alleged fraud in its Mongolia oil trading business.

And after a changing of the guard at the top of Trafigura the company is also making significant payouts to the departed executives. The most recent senior departure is chief risk officer Ignacio Moyano, who announced last month he was leaving.