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A Chevron gas station sign stands in Cardiff, Calif., on Jan. 25, 2016.

Mike Blake/Reuters

Chevron Corp’s surprise $5-billion all-stock deal for oil producer Noble Energy should spell the end of this year’s deal drought, setting a price benchmark that will trigger more buys, according to mergers and acquisition bankers, lawyers and analysts.

The COVID-19 pandemic destroyed fuel demand and left dozens of energy companies without the prospect of drilling their way out of debt. They may now be more willing to entertain deals with the Chevron offer as a standard.

“Sometimes you need the one significant deal to reset the comps and manage price expectations,” said Andrew Dittmar, an M&A analyst at researcher Enverus. “The debt maturity wall that has been out there for some time is getting closer and closer.”

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Chevron agreed to pay $5 a barrel for Noble’s proved reserves, a price that could reset expectations for sellers weighing deals, analysts said.

The bid also values Noble’s unproved reserves, those yet to be shown to be economically recoverable, at half of what Chevron offered for similar reserves at Anadarko Petroleum last year, Chevron said. It had valued Anadarko’s reserves at $3 per barrel, but was outbid for Anadarko by Occidental Petroleum.

Other oil companies that have hinted at interest in cheap reserves and have the wherewithal to buy include ConocoPhillips , Exxon Mobil Corp and Total SA.

“I do not think this marks the end of large deals for the oil & gas sector,” said Jon Clark, an oil and gas transactions executive at consultancy EY. “We see this strategic trend continuing,” said Clark.

Chevron’s Noble bid and BP Plc’s sale of its petrochemical business to chemical maker Ineos were designed to gain customers and build scale in related businesses, he said.

“This is going to wake a lot of people up,” said one Houston-based attorney specializing in energy mergers and acquisitions, who declined to be identified as customer discussions are confidential. “They are going to look at it and say ‘uh oh, even someone like Noble threw in the towel.’”

U.S. producers spent only $3.4-billion on company and land deals in the first six months of the year, turning away from buying assets as oil prices fell.

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Bankers and analysts said consolidation is needed to save many smaller players and that more deals will be paid for in stock alone, mirroring a number of buys last year.

Noble’s $13-billion price tag puts it among the five biggest deals since 2013 and brings with it holdings that include deepwater and natural gas assets, as well as shale plays in the Permian Basin, the top U.S. oilfield.

“Permian is still one place where buyers in the basin, probably don’t have enough, or not in the basin and want to get in,” said Vidisha Prasad, managing partner of upstream-focused energy consulting firm Adya Partners.

RBC Capital Markets analyst Scott Hanold said he expected at least one of the Permian’s big independent drillers to be sold.

“When you look at the big companies in there,” he said. “At least one will be consolidated in the next three or so years.”

The top Permian independent explorers and producers in his calculation include Pioneer Natural Resources Co, Diamondback Energy Inc, Parsley Energy and Callon Petroleum.

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