Navigating due diligence in oil and gas deals in the age of energy transition

Despite talk of a slowdown, oil and gas remain central to global energy systems. The world increasingly recognises that hydrocarbons, particularly gas, cannot be phased out overnight. As such, investment persists, though it is evolving in form and focus.

Recent acquisition activity illustrates continued confidence in oil and gas assets:

• In 2023, Chevron acquired Hess for US$60 billion.
• In 2024, ConocoPhillips acquired Marathon for US$22.5 billion.
• Analysts expect global energy investment to rise to US$3.3 trillion in 2025, with $900 billion for oil and gas and a further $854 billion for renewables and nuclear, according to the International Energy Agency (IEA).
• Some commentators suggest that, whilst mergers and acquisition activity may slow overall, there could be a shift in geographic focus, particularly towards the Middle East. This is reflected in the proposed US$18.7 billion acquisition of Santos by a consortium led by ADNOC’s investment arm and Carlyle. 

Geopolitical and fiscal developments are influencing transaction strategy:

• Tensions between Russia and NATO in the West and unrest in the Middle East, especially between Iran and Israel, continue to create volatility.
• Russia remains the world’s third-largest oil producer,  and approximately 20 per cent of global oil supply passes through the Strait of Hormuz. 
• In Europe, policy changes and fiscal adjustments are contributing to cautious investor sentiment.

These global conditions are shaping how buyers view risk and where capital is deployed.

The deal scope is expanding. Buyers are no longer acquiring just oil and gas assets in isolation. They are evaluating broader portfolios that increasingly include carbon capture and storage infrastructure, electrification and renewables integration, and hydrogen-related opportunities, legacy assets facing carbon obligations, such as the EU’s new carbon-storage requirements. 

This blurring of traditional asset boundaries calls for more integrated due diligence. Buyers are assessing not only the geological and engineering viability of assets but also the regulatory obligations and carbon liabilities, long-term decarbonisation compatibility, supply-chain interdependencies and system integration, and social and environmental performance.

Having a multidisciplinary technical team is now a core part of due diligence. Commercial, environmental, health and safety, and subsurface factors must be understood in parallel, not in isolation.

In a rapidly changing market, transactional success depends on anticipating how assets will perform within future energy systems. This requires due diligence to extend beyond project-level economics.

Energy economics are shifting. Standalone oil and gas projects may still succeed in the short term, but over time, deals that reflect system-level thinking are better placed to support long-term value. This includes energy projects co-located with renewables; assets with potential for CCS, electrification, or repurposing; and infrastructure that can support blended portfolios or future flexibility.

Our advisory teams support clients across the full value chain:

• Subsurface geology
• Engineering and facilities
• Well engineering and asset integrity
• Health, safety, and environmental review
• ESG screening and regulatory alignment
• Commercial modelling and economic valuation

Our teams have delivered support for oil and gas, hydrogen, and renewable infrastructure transactions globally, helping clients mitigate post-deal risk and better understand the role of assets in an integrated energy future.

Key takeaways

As deal structures evolve to reflect the energy transition, so, too, must the due diligence that underpins them. Transaction risk today includes more than just technical and commercial gaps. It includes regulatory exposure, carbon obligations, integration constraints, and geopolitical uncertainty.

To keep pace, deal teams should do these:

• Expand the scope of due diligence to include carbon, regulatory, and system-level considerations
• Apply cross-disciplinary reviews that combine subsurface, engineering, commercial, and ESG insights
• Reframe valuation models to reflect long-term integration potential, not just near-term returns
• Seek transaction support that reflects the realities of hybrid portfolios, not just traditional assets

Deals that anticipate the future energy system, rather than replicate the past, are more likely to succeed.