Second-quarter 2011 U.S. oil and gas transaction volume was up in terms of deal numbers—at 85, it was double first-quarter 2011's tally—but down modestly to an anemic $11.7 billion in total deal value.

The second-quarter dollar volume represents a half-billion-dollar drop compared to the first quarter, bringing announced transaction volume to $24.4 billion for the first six months of 2011. By way of comparison, the domestic market witnessed more than $27 billion in transactions alone during second-quarter 2010, and $37 billion during the first half of 2010.

Like all quarterly summaries, this one requires an asterisk. Missing from dollar volumes is Chevron Corp.'s sizeable purchase of 228,000 net acres in the Marcellus shale from Chief Oil & Gas LLC and Tug Hill Inc. Based on neighboring properties, which have sold for $7,000 to $11,000 per acre, Chevron's bolt-on Marcellus acquisition represents a transaction volume between $1.6- and $2.5 billion and carries an estimated 5 trillion cubic feet in total reserves.

JVs missing in action. Oil-related prospects enjoyed a strong preference in the transactions arena in the second-quarter. Transactions pertaining to the Bakken shale led all others, accounting for 13 of the 85 deals recorded in Hart Energy's A&D Deals database, followed by the Permian Basin, which accounted for 10 of 85 deals. The Eagle Ford shale also accounted for 10 deals during the quarter.

What accounts for the leisurely 2011 pace? High oil prices are one factor. Devon Energy Corp. and Forest Oil Corp. recently announced capex increases that indicate oil and gas operators are expanding budgets for field work in an effort to monetize existing liquids-rich reserves rather than obtaining new reserves via acquisition. Higher oil prices also may be encouraging property holders to believe it is a sellers' market, adding a certain stickiness to deal flow.

Secondly, soft deal volume implies transaction fatigue following the strong $72-billion flurry of domestic deals in 2010. Specifically, the term "JV" has faded in the transactions market as the strong arc of JV-related deals appears to have faded into minor transactions.

The market recorded announcements of seven JV transactions for the second quarter, including three in the Eagle Ford shale. But the announced transaction volume for JVs totaled $300 million in the two deals that provided fiscal terms and was less than 10% of the $3.6 billion in first-quarter 2011 announced JVs, including January's $1.2-billion Chesapeake Energy Corp./CNOOC Niobrara JV and the $1.5-billion Anadarko Petroleum Corp./Korea National Oil Corp. Eagle Ford JV.

That's not to say the JV deal market is destined for extinction. There are several sizeable packages under discussion, including the Utica shale in Appalachia, Oklahoma's Mississippi Lime and the Niobrara.

Major focus. But if last year's story involved record deal volumes with a strong JV component, this year's story centers on the rising tide of investment by major oil companies in the U.S. onshore sector. The focus appears to be the Marcellus shale, where Shell Oil, Chevron, and ExxonMobil Corp. have invested more than $12 billion in the past 18 months, including ExxonMobil's $1.69-billion corporate purchase of TWP Inc. and Phillips Resources Inc. in early June.

The majors garnered the transaction spotlight in the second quarter with buys by ExxonMobil, Chevron and Marathon Oil. Assuming a minimum level estimate of $1.7 billion for the Chevron/Chief acquisition, the three international oil companies represented 51% of transaction volume during the quarter, including the three largest deals in the U.S. onshore space.

While the majors have focused overwhelmingly on the Marcellus (1.4 million acres in acquisitions since June 1, 2010), the Eagle Ford has also been a target, with BP Plc, ExxonMobil, Chevron, Hess Corp. and Shell adding positions in the past 18 months.

Marathon added the exclamation point in June with its $3.5-billion purchase of Hilcorp Energy's 141,000 acres in the gas-condensate window of the Eagle Ford.

Outside the majors, Tulsa-based Laredo Petroleum Inc. was a close fourth-place finisher with its $1-billion buy of Dallas-based Broad Oak Petroleum Inc. The two shared a common financier in Warburg Pincus.

In all, transactions with an unconventional component represented 76% of second-quarter deals in the domestic market.

Look for activity to heat up in the transactions market during the second half of the year, as independents get oilier. Still, deal volume is on track to finish well below the record $72 billion in 2010.