As the top oil supermajors in the U.S.—Exxon Mobil, Chevron, and ConocoPhillips—gobbled up smaller players, the next feeding frenzy was supposed to come from private equity-backed startups that had raised funds and were ready to feast on so-called, “non-core” asset sales from the biggest oil producers.

Now, energy-focused private equity firms are waiting and working behind the scenes amid the current uncertainty, looking for advantages or signs of distress to jump into the fray and start buying. But it may take longer than they initially expected.

“When you do have uncertainty, when you do have market dislocations, we have seen very compelling investment opportunities that tend to present themselves during those periods of time,” said Mark Teshoian, managing Partner and co-head of energy private equity at Kayne Anderson, told Fortune. “Our expectation is that now will be no different.

PE firm Kayne Anderson announced May 13 the closing of its $2.25 billion Kayne Private Energy Income Fund III, easily exceeding its initial $1.5 billion target. The firm in late April, for instance, committed $400 million to the Oklahoma City-based startup South Wind Exploration & Production—an oil and gas firm, not wind energy—which has yet to make any big acquisition moves.

“We don’t know exactly where those opportunities will present themselves, but we have found that—when you have a little bit of uncertainty, a little bit of distress—having access to capital, having a good reputation in the industry, does tend to allow you to get deals done,” Teshoian said. “In our experience, those deals have historically performed better when acquired or invested in during these more uncertain periods of time.”

The biggest energy deals that closed in 2024 included Exxon buying Pioneer Natural Resources for $60 billion, Conoco snatching Marathon Oil for $22.5 billion, and Diamondback Energy acquiring Endeavor Energy Resources for $26 billion. The pending $53 billion purchase of Hess by Chevron won’t close until this summer at the earliest because of an arbitration dispute.

In the meantime, the remaining private equity firms focused on oil and gas built up a lot of dry powder that is now ready to be deployed, said Andrew Dittmar, principal analyst for Enverus Intelligence Research, including for assets such as Conoco potentially selling Marathon’s legacy Oklahoma acreage position.

But tariffs create cost concerns, especially when they are constantly in flux, and the lower oil prices create a greater mismatch in the bid-ask spread between buyers and sellers, he said, stalling out or killing most potential deals.

“The bigger public companies really pushed aggressively to consolidate,” Dittmar said. “I think the private equities are ready to make some moves when assets do come up for sale if we go through a larger wave of non-core divestments.”

Working behind the scenes

Similar to Kayne Anderson launching South Wind, Post Oak Energy Capital recently backed the startups of Tiburon Oil & Gas, Ichthys Energy, and Quantent Energy last fall.

Quantent made a modest initial deal in September, but the three have yet to publicly act otherwise.

“There’s no lack of effort on trying to reach an agreement around bid-ask. We’re not taking a holiday. We’re not taking a wait-and-see approach,” said Frost Cochran, managing director and founding partner at Post Oak. “But we are influenced by our view that oil prices could be low for a while.”

Still, the Post Oak-backed companies are making “small bite” deals that don’t rise to press release levels, even if larger-scale deal making seems temporarily off the table, said Frost Cochran, managing director and founding partner at Post Oak. These are deals closer to $10 million than “hundreds of millions,” he said. “I think we could have a very disappointing year in transaction activity. Our base case is this could be a slow period this year, and activity picks up next year.”

In the meantime, Cochran said, “We focus more on the ground game for our portfolio companies, and that’s why we’re still actively buying small assets to bolt onto existing positions. The larger M&A stuff may just have to wait until we’re past this period of volatility.”

There is still some more modest M&A occurring since President Trump’s tariff “Liberation Day” in the beginning of April. Publicly traded Permian Resources, on which Cochran sits on the board, bought a large swatch of Apache’s Permian Basin assets in New Mexico for $608 million in early May. But no other oil deals have exceeded $500 million.

Citing the Permian Resources-Apache deal, Cochran said, bigger oil producers may be willing to sell some acreage at a discount to maintain their spending plans on their core assets and to keep their dividends fully funded.

And the definition of what counts as “non-core” assets put up for sale by companies could widen the longer crude oil prices remain weaker.

“If lower prices persist into 2026, that’s when you may see companies start to become more elastic on the definition of what counts as a non-core asset as they divest to preserve cash and pay down debt and protect the dividend,” Dittmar said.

The only deal bigger than Permian Resources since April 1 was focused entirely on more bullish natural gas, and not on crude oil, especially in the gassy Marcellus Shale in Pennsylvania. In late April, EQT said it would buy Blackstone-backed Olympus Energy for $1.8 billion in the Marcellus.

Just prior to tariffs, gas bullishness rose to the level that generalist hedge fund giant Citadel bought Haynesville Shale producer Paloma Natural Gas for $1.2 billion in March.

So, while oil price futures remain hazier, there’s more emphasis on natural gas, especially thanks to construction booms for both liquefied natural gas export facilities and for data centers that crave gas-fired power.

Ben Davis, managing director at Energy Spectrum Capital, is very cognizant of that reality.

U.S. grid demand was basically flat and increasing 0.2% per year for more than 15 years as of 2023, according to S&P Global Commodities Research. Now, it’s slated to rise 1.7% per year from 2024 to 2050.

“That may not sound like a lot, but that’s an incredible increase,” Davis said. “We think it makes for an attractive investment environment.”

Because the up-and-down cycles for oil and gas prices have occurred more frequently in the past decade and there are now fewer potential buyers because of consolidation, PE firms are willing to hold onto their portfolio companies for longer and run them more like publicly traded companies with an emphasis on free cash flow and returns.

“It’s a very tough time to sell assets,” Davis said. “People want to see how the dust settles.”