HOUSTON—The acquisitions and divestitures (A&D) market is saturated with companies; acreage is sitting still; and the capital for companies to keep growing will be tough to find with many exploration and production (E&P) companies outspending cash flow.

Welcome to a buyers’ market.

In the first quarter 2014, North America remained the most targeted region for energy, mining and utilities deals with $29.3 billion compared to $50.6 billion in the first quarter of 2013, according to Mergermarket.

However, the broader 40% decline in value is another indicator that many U.S. oil and gas companies are largely content with the assets they have.

Stockpiles of inventory have made them pickier about what they’re willing to acquire in 2014. With a focus on efficiencies and cost cutting, any potential deal has to be for a superior asset.

For sellers, “I think the market may be a little bit strained. Independents aren’t quite culling off as many properties as they used to,” said Bruce Cox, managing director and head of energy acquisitions and divestitures at Credit Suisse LLC. Cox and other panelists spoke at the Mergermarket Energy Forum on April 9.

Who will come to the rescue? The possibilities include MLPs, private-equity and patience.

MLPs are likely to emerge as massive aggregators of acreage, but only after more data about resource play longevity emerges. Private-equity will also play a role with $60 billion or more available to invest. And as growth in shale plays drop over the next few years, companies may begin consolidating.

One other driver may speed up mergers: The brutal competition for rigs and talent in shale plays. Putting two companies together and ceasing hostilities just might make sense.

In 2013, operators achieved strong valuations, with many launching successful IPOs. For the first time in many years, oil industry companies are capitalized in the 10s of billions of dollars.

Since then, they’ve promised growth of 20% or more.

“These are all very profitable companies,” said Ben Lett, managing director of global mergers and acquisitions (M&A) at Bank of America Merrill Lynch. “The question is, when does that growth dissipate? When do those basins roll over and when do you run into basin problems?”

Until company values drop, majors and large independents don’t want to spend the money required to take down smaller companies trading at high multiples.

“We expect in the next few years you’re going to see growth plateau,” Lett said, perhaps as early as 2016.

The A&D downturn in 2013 is still being sifted through, although it was clear by midyear that sellers had to spend more time and money to make their acreage appealing.

After last year’s drop of $5 billion to $7 billion in A&D deal values, it’s apparent some market dynamics have upended. The average deal size fell to $200 million from about $400 million, more in line with historical averages. The number of deals was dramatically up, Cox said.

But a standout element of 2013 was that many of the properties that hit the market weren’t transacted on at all, Cox said.

“The main takeaway is what emerged was a buyer/seller divide, particularly along the lines of valuation,” he said. “In 2013, the market became a lot more efficient, and some would argue, much more balanced.”

Corporate-to-corporate M&A tanked especially hard. For the year, $6 billion worth of such deals were done in 2013. The historical average is $35 billion to $40 billion, Cox said.

Another barrier for deals was that large oil and gas companies are engaged in projects of an enormous scale.

“LNG is taking up a tremendous amount of capital,” Lett said. “Frankly, they’re not producing cash flow. It will in the next few years and that will change things.”

The majors also have vast portfolios and are divesting where they can. And they view independents and shale plays as being overvalued by the public markets, Cox said.

Extremely high valuations of smaller companies are a deal killer for the majors, Lett said.

“It’s difficult for them to pay the price needed to do an M&A to take some of these companies out,” he said.

The smaller independents aren’t yet ready to join in with others in particular basins, particularly as they continue to grow.

“They weren’t inclined to do big M&A to combine companies in basins,” Cox said, “Although I think that’s logically where a lot of these basins need to take themselves, particularly the more mature ones.”

In time acquisitions will pick back up, especially as upstream MLPs buy assets, Lett said.

“I would argue that, as these basins mature and the shale plays come off hyperbolic declines and stabilize, MLPs will become massive aggregators,” Lett said. “We’re already seeing them dip their toes in the market.”

In March, for instance, MLP Memorial Production Partners LP (Nasdaq: MEMP) announced it would buy oil and gas interests in the Eagle Ford from Alta Mesa Holdings LP for a $173 million.

One way companies may be pushed more swiftly toward consolidation is the war for talent and rigs in the basins.

“You’re not going to have the cash to continue to grow that fast,” Lett said.

Without skilled workers, “you can’t run the rigs and get the people to take advantage of the resources unless you garner a new resource base,” Lett said. “Those resources walk out the elevator every day and have a better opportunity down the street.”