OKLAHOMA CITY—The Midcontinent region is ripe for M&A, but complex geology and a wide variety of plays types—against the backdrop of volatile oil prices—have for now slowed deal flow. Yet, experts who gathered at Hart Energy’s DUG Midcontinent conference predict more transactions lie ahead.

The region has allure, according to two buyers, private-equity-backed FourPoint Energy LLC and Florida Power and Light Co. Both closed interesting deals in Oklahoma in December.

Due to lower oil prices, the Midcontinent rig count has dropped from 190 to 145, or about 23%. The estimated average breakeven price for the the south-central Oklahoma oil province (Scoop) is $48 per barrel (bbl) and for the Mississippi Lime play in northern Oklahoma, $68. In comparison, the Eagle Ford Shale is $58 and the Bakken Shale, $63.

“No battle plan survives first contact with the enemy,” said Brad Marvin, a West Point graduate and vice president of business development for FourPoint. The Denver-based company has more than a decade of experience in the Midcontinent region and has made numerous acquisitions there. The company has data on some 25,000 wells in the Anadarko Basin.

Marvin asked, “How do you react to this, a massive and unexpected dislocation in the market?” He advised companies to adapt to ever-changing industry dynamics by knowing their team’s strengths and playing to those, determining what the corporate vision is, and “deciding what you want to hold onto and what you want to monetize.”

Rapidly evolving play maturity has implications for companies backed by private equity such as FourPoint, Marvin said. Some $60- to $100 billion of private equity is waiting on the sidelines to do some kind of deal, whether to fund a startup, recapitalize a company or buy distressed debt. FourPoint is backed by a $2.4-billion capital commitment from EIG Global and GSO Capital.

In May 2104, FourPoint and EnerVest Ltd. signed a joint venture in the Anadarko Basin, and in December they closed on their $1.95-billion purchase of assets from Linn Energy there. The deal included 1,358 producing wells and midstream facilities in the Oklahoma and Texas panhandles. Production acquired was 195 million cubic feet per day (MMcf/d).

EnerVest will operate the wells and FourPoint will handle land acquisition. They will jointly acquire other assets.

“The Anadarko Basin is not a five-minute story like other shale plays. It is more complex, but we like the optionality of either oil, gas or liquids, shallow and deep. We think it has a world-class resource base,” said Marvin.

Separately, but also in December, Florida Power and Light got final regulatory approval to exchange capital for access to natural gas supplies over the life of 38 wells in southeast Oklahoma, all to be operated by PetroQuest Energy Inc. (NYSE: PQ). It will acquire up to 2 Bcf of gas/d through an arrangement with PetroQuest in the Woodford Shale. This enables Florida Power to lock in the cost of gas for the life of the wells and save its customers some money.

Natural gas makes up 22% of the utility’s energy source.

“This is very much a ‘dip the toe in the water’ approach for us,” said Sam Forrest, vice president of energy marketing and trading for Florida Power and Light. “This will cover only 2% of our gas needs. The whole process was quite an education for us and for the Florida Public Service Commission.”

Florida Power and Light has asked for a set of guidelines from the commission to handle future gas resource investments such as this one. The initial rules are supposed to be issued sometime this spring, Forrest said.

The challenge to these kinds of deals is that the gas market is very fast-paced, so most gas producers aren’t willing to wait while a utility buyer wades through the lengthy state regulatory approval process, he said.

“We talked to 25 or 30 parties along the way. Then we had the agreement signed with PetroQuest in May 2014, but final approval from our regulatory commission was not received until December. One of the challenges was that we had to prove this would provide savings to our utility customers.”

Flordia Power and Light is the largest consumer of natural gas among all U.S. electric utilities. Last year it paid as much $8.40 per million British thermal unit for gas, although it had a large hedging program in place also. It has signed up to be the anchor shipper on two new gas pipelines going into Florida as joint ventures operated by Sempra.

“In 2001 we used 40 million barrels of oil but we have completely driven that out of the portfolio, using it mostly as a backstop. In 2014 we used less than 1 million barrels, and that is something we are very proud of,” Forrest said. “Today 66.4% of our generation comes from gas…and we have cut our CO₂ emissions by 50%.”

The company projects using 600 Bcf of gas in 2015 vs. 550 Bcf in 2013, and it now uses more natural gas than peers Duke Energy and Southern Co., he said.

Despite the aforementioned deals being closed the low oil price has disrupted most M&A activity, yet it should not have been such a surprise, according to Sylvia Barnes, managing director and group head of oil and gas for Keybanc Capital Markets.

“What was the forward curve telling us a year ago and why weren’t we listening? Why didn’t we remember what we all learned in Economics 101, that if demand stays the same and yet supply goes up, the price will go down?” she said.

Smaller E&Ps have been the most vulnerable to the oil price collapse, and therefore are most likely vulnerable to M&A activity, panelists said. “If you have a market cap of less than $1 billion, on average your stock is down 61%,” Barnes said. “If you are leveraged you are being punished.”