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This hasn't been a particularly strong year for energy M&A, which has impacted the volume and mix of work handled by Texas lawyers who work in the energy sector.

Lawyers whose firms are among the top players in the Texas energy market said business is off some, but there is still work to keep them busy—in some cases, restructuring work is filling the M&A void.

"It's not like there's no transactions, but … especially in capital markets, it's not as active as it's been in the past," said Josh Davidson, chair of the corporate department in Houston for Baker Botts. "A lot of the deals we have done this year have been in the MLP [master limited partnership] restructuring" space.

The M&A lawyers accustomed to putting in long days at a bargaining table have shifted their emphasis this year. They're more frequently assisting distressed companies, working on bankruptcies and credit restructuring.

The statistics tell some of the story.

According to Andrew Dittmar, senior M&A analyst at Austin oil and gas analytics firm Enverus, the dollar value of energy M&A through the third quarter totals $85 million, which is just a few million more than the total for all of 2018. But that value, he noted, is skewed by one mega-deal: Occidental Petroleum Corp.'s acquisition of Anadarko Petroleum Corp. in August, which was valued at about $55 billion.

Dittmar said his company counted 340 M&A transactions in the oil and gas sector in 2018, compared with only 151 through the third quarter of this year—a definitive decline. Enverus tracked 58 mergers and acquisitions in the first quarter, 57 in the second and 36 during the third.

"Deals aren't happening," Dittmar said.

But that is a bit of a generalization, he noted, adding that many shale players are negotiating mergers of equals, such as Callon Petroleum's acquisition of Carrizo Oil & Gas, and the recently announced deal for Parsley Energy to acquire Jagged Peak Energy.

But the flow of "bread-and-butter" asset acquisition transactions, which were prevalent in 2016 and 2017, has slowed, he said.

It's not just the volume of deals. The market is plagued by uncertainty about where the price of oil will land, which affects the profitability of oil and gas companies. And the count of U.S. rigs drilling for oil has slipped below 700, down 20% from a year ago.

Those realities have affected the kind of work Texas law firms are handling.

Dewey Gonsoulin Jr., chair of the finance department at Bracewell LLP, who primarily works on upstream transactions, said it's been a "pretty choppy" year so far, and but noted there's been an uptick in refinancings.

"Not as many M&A deals are being done and the ones that I've seen, a lot of them, have been more distressed-type sales," Gonsoulin said.

His partner, Alan Rafte, chair of Bracewell's business and regulatory section, said he's worked on a few deals in the upstream area for larger companies selling off non-core assets, but midstream, in contrast, is "very hot" because of construction projects to transport oil and gas from the Permian Basin to the Gulf Coast.

"We worked on more than half of those projects, all big multibillion-dollar projects, typical in joint ventures," he said. "That's all pretty exciting, big stuff."

Rafte said the downstream area has been slow, with few refinery transactions, but the power space has been active, with M&A driven by private equity funds selling portfolio companies.

Sean Wheeler, a corporate partner at Kirkland & Ellis' Houston office, said deal volume was "healthy" during the first half of the year, but fell off considerably during the third quarter.

Doug Bacon, another partner at Kirkland's Houston office, said the firm's lawyers in Houston and Dallas have stayed busy because the firm has a significant private equity client base, so it is not as dependent on public company transactions.

Over the last year Kirkland lawyers in Texas have advised more than 100 clients on oil and gas M&A valued at more than $80 billion, the firm said.

Stephen Gill, who leads Vinson & Elkins' public company M&A practice, said deal activity did "fizzle out" during the summer, with the Occidental/Anadarko transaction being the big exception. But since Labor Day, he said, he's encouraged by the announcement of a few more M&A deals.

"M&A has been slow in 2019 for sure, but it seems like we are seeing … people reengaging in discussions. Consolidation just seems to make so much sense," Gill said.

Alternative energy projects have been a good source of work this year for Baker Botts, Davidson said.

He is not sure what to expect in 2020. "You worry about the continued effect of low gas prices and the unwillingness of investors to continue to put money into frackers who produce but aren't really making money. What the effect of that will be, we will see," he said.

One thing that hasn't changed about the oil and gas business is its cyclical nature, Davidson said.

"It's gone up and down forever … and it will continue to do so. It's always difficult to see what's going to be the next thing," he said.

Looking ahead for fourth-quarter deal totals, analyst Dittmar said he expects corporate consolidation to continue, but those deals may not come together until 2020.

"It's difficult to call the timing," he said.

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