The following report compiles EBITDA and revenue multiple data pertaining to the sale of private oil and gas companies in Q4 2023. Using proprietary data aggregators, news and media reports, and industry publications, our team has calculated the following averages. (Sources)
The tables below show average EBITDA and revenue multiples for private oil and gas businesses, broken down by industry subsector as well as EBITDA and revenue range.
EBITDA Multiples for Private Oil and Gas Companies, Q4 2023
| Company Type | EBITDA Range | ||
| $1-3M | $3-5M | $5-10M | |
| Downstream | 6.2x | 7.3x | 8.1x |
| Midstream | 4.9x | 6x | 6.4x |
| Upstream | 5.3x | 6.4x | 7.5x |
| Integrated | N/A | 5.4x | 6.6x |
Revenue Multiples for Private Oil and Gas Companies, Q4 2023
| Company Type | Revenue Range | ||
| $1-5M | $5-10M | $10-25M | |
| Downstream | 1.9x | 2.5x | 3.6x |
| Midstream | 1.5x | 2.1x | 3.4x |
| Upstream | 1.8x | 2.6x | 4.1x |
| Integrated | N/A | N/A | 3.1x |
The State of Oil and Gas M&A Moving into 2024
Oil & gas M&A exhibited YoY gains for the last three years despite considerable macroeconomic headwinds. In the last year, the M&A market has seen multiples for smaller firms rise considerably, on average rising between 2.8x and 3.5x across industry subsectors, in some cases being valued at nearly the same rate as larger integrated companies. Our team attributes the increases in EBITDA multiples to high gas prices stemming from increased demand for oil and gas, which was caused by OPEC raising their long-term oil demand outlook by 6 million barrels in October 2023.
Private Oil & Gas Deal Value & Volume, H1 2020-H2 2023
| H1 2020 | H2 2020 | H1 2021 | H2 2021 | H1 2022 | H2 2022 | H1 2023 | H2 2023 (projected) | |
| Deal Value | $39B | $86B | $97B | $89B | $103B | $92B | $105B | $97B |
| Deal Volume | 155 | 194 | 168 | 212 | 170 | 216 | 187 | 232 |
2023 saw notable improvements for independent downstream oil companies, which had, on average, a +1.2x increase in their EBIDTA multiples. Midstream companies, by contrast, took a small hit at -.4x, and upstream companies saw a smaller increase than downstream at +.7x.
Integrated companies with operations in two or more stages of oil production saw approximately a +.3x rise in their EBITDA multiple. This increase seems modest, however our data suggests that buyers are becoming more interested in picking up smaller companies: nearly 60% of upstream deals in 2023 were for companies under $250m in revenue. Our team has observed this behavior from M&A buyers across several industries and believes acquirers are looking at smaller companies as a way of managing the current high interest rates.
EBITDA Multiples for Private Oil & Gas Companies, Q1 2020- Q2 2023
As the graph above shows, EBITDA multiples reached their pre-pandemic levels around Q4 2022 and have been making steady gains ever since. Our research does indicate, however, that the deal process has lengthened significantly, with averages rising from 5-6 months in 2021 to 9-10 months as of Q4 2023.
The last two years especially have seen extended due diligence due to geopolitical conflict (i.e. the Russia-Ukraine war) as well as tightening legislation as a result of growing pressure for oil companies to comply with ESG standards. In August, for example, the Department of the Interior proposed permanently raising royalty fees to 16.7%, cementing previously temporary changes caused by the Inflation Reduction Act. As we’ve observed in other industries, buyers are likely to wait these challenges out to see their effects on the industry once implemented before committing to any large purchases.
Based on the current M&A market and observed industry trajectories, our research team makes the following predictions:
- More public companies will go private. In order to escape ESG regulations placed on public oil and gas companies, business owners are likely to take their operations private. We’ve already seen this in the 2022 data, which showed 64% more public-to-private deals than private-to-public and showed nearly a quarter of all deals moving away from companies with net-zero commitments. We expect a larger portion of the oil industry will go private in the coming years.
- M&A deals will take longer but earn higher payouts. Based on current projections, however, rates may not become truly attractive to buyers until 2025, as initial decreases next year are hypothesized to be minimal. On the other hand, oil and gas multiples have surpassed their pre-pandemic levels as of last year and are consistently rising in deal value YoY, meaning that the payout at the end of these extended deal processes is likely to be higher than what business owners have received in the last three years.
- Smaller companies stand the most to gain in the coming year. By far, the biggest advances shown in oil and gas over 2023 were in smaller independent companies ($1-10M EBITDA) specializing in one area of production. Companies in this position are even in a strange position to benefit from high-interest rates, which have turned acquirers away from expensive, larger companies. In this position, the most advisable course of action is to start a relationship with an M&A advisory firm early to survey the market.
| Related: See our report on the Top M&A Advisory Firms in the US |
Selling Your Oil and Gas Company
M&A data is often kept frustratingly opaque, which makes it all the more difficult for business owners going through a process. Publishing this data is a part of my mission to improve transparency in M&A. I’m also available to speak to fellow entrepreneurs to offer advice on where your company is at and what next steps you should take.
You can reach me using the link below or through the contact page of this site.
