Financial soothsayers predict many deals to come for E&Ps, but the tea leaves also point to much pain in 2015.

“Looking forward, the oil price collapse will spur increased transaction activity during 2015 for a couple of reasons,” said Mitch Fane, oil & gas transaction advisory services leader for Ernst & Young LLP in the U.S.

“On one hand, upstream companies with strong balance sheets operating in low-cost basins will be well-positioned to not only weather the dip in prices, but also scoop up assets from those with less liquidity or more capital intensive assets,” he said. “At the same time, companies across the O&G segment will be pressured to review and reshape their portfolios to optimize capital and create higher returns.”

As oil prices fell, the A&D market year ended down after the second and third quarters of 2014 showed huge spikes in activity.

Global oil and gas transaction activity posted a solid fourth quarter and a big rebound for 2014 as total reported deal value rose 67% year-over-year. But it was a year of giant deals, with the number of deals down 20% for the year.

Global upstream deals followed a similar trend as deal volumes and were down 22% during 2014, while upstream values rose 21%.

Midstream transactions dominated to the end of the year. During the fourth quarter of 2014, North America reported 19 deals valued at $56.6 billion. Oilfield services also had a very good fourth quarter, largely because of the $35 billion Halliburton (NYSE: HAL)/Baker Hughes (NYSE: BHI) deal.

Wood Mackenzie's corporate upstream research team came to much of the same conclusions, calling 2015 a potential bazaar for E&P shoppers.

“Distressed sales—asset and corporate—could precipitate the emergence of a true buyers’ market in 2015,” the report said. “Selling assets into a market with few buyers will be a last resort.”

The financially strong will put projects on hold, but some companies will find themselves with little choice, unable to achieve the cuts in discretionary spend required to balance the books.

“Large-scale corporate consolidation is more likely than at any point since the late-1990s,” the firm added. “History shows that value creation through M&A is largely driven by commodity prices. For buyers that believe in long-term oil above $80-90 per barrel, 2015 will be a year to go long.”

However, exploration will suffer as buyers go after high-impact acreage and known resources.

“Play-opening discoveries will be few and far between as scarcer capital is reallocated toward appraisal and higher returning incremental prospects,” Wood Mackenzie said. “Exploration budgets will fall sharply, although lower costs will be an offsetting factor.”

The looming unknown is how much and for how long costs will fall. Companies will hold fire on expensive frontier drilling in anticipation that lower drilling and appraisal costs could materially improve full cycle economics.

The opening up of Mexico will also herald a new wave of resource access and an opportunity for financially strong majors, large caps and national oil companies.

David Tameron, senior analyst, Wells Fargo Securities, said companies continue to believe that prices will recover.

“Generally we sense hesitancy on behalf of E&Ps to try to get in front and drastically reduce activity levels, both for operational reasons and 2016 production profiles,” he said in a Jan. 23 report.

Companies cannot simply roll down 20 rigs to two and back up to 16 overnight, he said.

Tameron said E&Ps seem to be reacting slowly to a potentially challenging six months ahead of them. Given strip prices, many companies do not have a sustainable strategy. Wells Fargo listed 60 companies with their borrowing capacity and how much debt they held in the third quarter of 2014.

The companies had debt of about $18 billion from a combined borrowing capacity of $62.8 billion.

“If oil stays at $50 per barrel for 12-18 months, we will see the E&P universe shrink dramatically, either voluntarily or involuntarily,” Tameron said. While several companies had no outstanding debt listed, others had borrowed up to 85% of their revolver. The median liquidity for the group was $651 million.

Tameron, too, believes consolidation could be on the horizon—just not yet.

“Some companies have built cash war chests, intentionally or not, and are on the hunt for either asset specific or corporate level opportunities,” he said.

For now, current bid-ask spreads remain too wide to make deals. But by mid-year, potential for deals rises if commodity prices are flat.

In any case, the industry is likely to see fat trimmed, inefficiencies removed, returns more normalized and activity levels and companies themselves rationalized.

“A cyclical business and industry should be healthier as a result of the adjustment process, though more pain is likely needed before consolidation gains momentum,” Tameron said. “Put simply, money needs to come out of the sector.”