There was plenty of dealmaking in the energy sector last year, but most acquisitions were smaller and the pace of so-called mega deals slowed significantly.

Energy companies are acting more conservatively and focusing on execution to appease investors weary of overspending, while private equity firms are beefing up their activity to help narrow the gap, according to new mergers and acquisitions reports from PricewaterhouseCoopers and Wood Mackenzie researchers.

Last year started out with a bang as big energy companies like Exxon Mobil spent billions of dollars to bone up in booming areas like the Permian Basin, but the M&A activity closed out the fourth quarter with a whimper. The final three months saw its deals dip by nearly 50 percent in value versus the fourth quarter of 2016, according to PwC, even as oil prices spiked.


"The year ended on a hesitant note. Many investors seem to be taking a wait-and-see approach to the rapidly changing market dynamics. Although most developments look positive, investors seem to be treading carefully," said Joe Dunleavy, PwC energy, utilities and mining deals leader.

Overall, 2017 saw $182 billion in U.S. energy deals, down 10 percent from 2016. However, the amount of transactions - 224 deals - was up 13 percent from 2016.

There were lots of deals in 2017, but few so-called mega deals valued at $5 billion or more. In fact, four of the seven mega deals last year involved insider deals between parent companies and their master-limited partnership spinoffs, commonly referred to as dropdown deals.

However, private equity spending represented 17 percent of all U.S. energy deals in 2017 - the highest percentage since 2012.

With much of the early activity concentrated in the Permian, the transactions have since switched to other geographic areas since Permian assets are valued so highly. South Texas' Eagle Ford shale, Colorado's DJ Basin and the less talked about Green River formation all saw more signs of life. The Green River shale is concentrated along the borders of Colorado, Wyoming an Utah.

While 2018 is starting out cautiously on the transactions front, the new U.S. tax law could spur more deals with energy companies having more unexpected cash on hand, according to the reports.

Although the U.S. continues to lead the global resurgence, more international dealmaking is likely i 2018, according to Wood Mackenzie, with higher oil prices. Big oil majors want to bolster their holdings and government-owned national oil companies plan to come back to life after the oil bust. Chinese and Russian energy companies could be particularly active.