Oil prices have fallen so steeply this month that it's no longer profitable for many companies to drill new wells in major U.S. patches.

Why it matters: Deal activity slows dramatically when the underlying economics don't work.

• This was true during both the 2014 and 2020 oil price downturns, and comes amidst what already was a weakening environment for energy M&A.

By the numbers: WTI opened this morning at $61.03 per barrel, and was below $60 both yesterday and as of this writing.

• According to a Dallas Fed survey of oil and gas firms, WTI must be at least $61 per barrel to be profitable for new wells in the Midland Basin, which is part of the Permian Basin, and only goes up from there.
• It's $62 for the Eagle Ford and Permian's Delaware Basin, $63 for other U.S. shale, $66 for U.S. nonshale, and $70 for elsewhere in the Permian.
• The profitability thresholds are significantly lower for existing wells, topping out at $45.

Behind the scenes: "An even bigger issue than just lower crude prices is the volatility and policy uncertainty that makes it difficult to negotiate fair value for deals," explains Andrew Dittmar, an analyst with Enverus Intelligence Research.

• He adds that most companies will "hunker down" by focusing on existing wells and relying on hedges.

Flashback: Oilfield consolidation drove the M&A market in 2023 and early 2024.

• This included a lot of exits by private equity, which now has a relatively low level of U.S. shale exposure. Maybe they were prescient, or maybe just lucky.

Look ahead: There normally are two ways for energy deals to pick back up, the first of which is price increases.

• The second is price projection confidence. Firms may not be happy if they conclude that prices will remain below $60 into 2026, but at least it can help them make disposal decisions. And it could come fast and furious, as it did in the second half of 2020.
• One big caveat, however, is the aforementioned consolidation. There just aren't as many stray assets lying around, which means the M&A market may need to rely on breakups.

The bottom line: President Trump's policies so far have favored lowering pump prices over boosting production, at least in the short-term, despite his "drill baby drill" rhetoric.

• For now, they've also encouraged dealmakers to watch from the sidelines.

Chagee, a Chinese teahouse operator and franchisor, set U.S. IPO terms that could raise over $400 million at a $5.1 billion valuation.

Why it's the BFD: The IPO market has been catatonic since President Trump announced new tariffs, so it would be ironic if the first major listing after "Liberation Day" comes from the one country still in his crosshairs.

Zoom in: Chagee reports $344 million of profit on $1.7 billion in revenue for 2024, and 6,440 teahouses.

• It filed to sell 14.68 million shares at between $26 and $28 per share, and plans to list on the Nasdaq under ticker symbol "CHA."
• Shareholders include Congbi Qiushi and XVC.

The bottom line: The IPO prospectus' risk section reads like a ChatGPT summary of recent trade war headlines, including a tacit reference to Treasury Secretary Scott Bessent's recent comments about delisting Chinese securities from U.S. exchanges.

• Jobandtalent, a Spanish short-term work platform, raised €92m in Series F funding at a €1.3b valuation (down from €2.1b in 2021) from Atomico, BlackRock, DN Capital, Hercules, InfraVia, Kibo, and Kinnevik. The round values the company at €1.3b, down from €2.1b in 2021. axios.link/429bSGn

• Incident.io, a London-based incident management startup, raised $62m in Series B funding at a $400m valuation. Insight Partners led, joined by insiders Index Partners and Point Nine. axios.link/3Gi3fR2

• nEye Systems, an Emeryville, Calif.-based optical switch startup, raised $58m in Series B funding. CapitalG led, joined by M12, Micron Ventures, NVIDIA, and Socratic Partners. axios.link/3GfdOEw

• LiveKit, a San Jose, Calif., network infrastructure startup for multimodal AI apps, raised $45m in Series B funding at a $345m valuation. Altimeter Capital led, joined by Redpoint Ventures and Hanabi Capital. livekit.io

• Meanwhile, a Bitcoin-denominated insurer, raised $40m in Series A funding co-led by Fulgur Ventures and Framework Ventures. axios.link/42vhv0B

🚑 Clinomic, a German platform for streamlining intensive care workflows, raised €23m co-led by DTCF and an undisclosed family office. axios.link/4lpwtxC

• Faume, a French circular fashion startup, raised €8m. Amundi led, joined by insiders Daphni and Bpifrance. axios.link/4jsnlGK

🚑 Cofertility, an LA-based egg-freezing startup, raised $7.25m in Series A funding. Next Ventures and Offline Ventures co-led, joined by Initialized Capital and Gaingels. axios.link/3G0bUYz

• Damisa, a British cross-border payments startup, raised £2.25m in pre-seed funding led by Fuel Ventures, with participation from EWOR and Greyhound Capital. axios.link/4lmkGjP

• Inventex, a Salt Lake City-based patent application automation startup, raised $2.4m in pre-seed funding from Conviction Capital, Fred Ehrsam, and Cambrian Ventures. axios.link/4lozwpO

🚑 Illumicell AI, a Boston-based portable lab scanner and diagnostics provider, raised $2m in pre-seed funding from KOFA Healthcare, Harvard Phoenix Venture Fund, and MedTechSyndicates. axios.link/3XTjf24

• Habitual, a U.K. weight loss startup, raised £1m from Lexham Partners. tryhabitual.com

• AMPAM Parks Mechanical, a portfolio company of Gemspring Capital, acquired Seal Electric, an El Cajon, Calif.-based electrical services provider for the multifamily market. ampam.com

• Blackstone will pay $718m for a portfolio of 25 warehouses in Texas from Crow Holdings. axios.link/4j3p5q2

🚑 Keensight Capital pulled its buyout offer for British medical device maker Niox Group (LSE: NIOX), due to economic conditions. axios.link/42rNgHw

• New Mountain Capital invested in Thoughtful.ai, an Austin, Texas-based revenue cycle automation company. axios.link/3EhuoDa

• WestBridge invested in Koto, a London-based creative agency. axios.link/3G7KiAH

• Wind Point Partners acquired Sigma, a New Jersey-based maker of waterworks infrastructure products. sigmaco.com

• TZP Group completed a majority recap of Superscapes, a Carrollton, Texas-based commercial landscaper whose backers have included Crux Capital. superscapes.net

• Clessidra Private Equity is weighing a sale of Impresoft, an Italian enterprise software firm that could fetch around €800m, per Bloomberg. axios.link/3Yq3lfM

• Honeycomb, an SF-based observability platform that's raised around $150m, acquired Grit, an open-source query system and AI agent that had raised $7m from firms like Founders Fund and Abstract Ventures. axios.link/3YmB2ib

• OpenGate agreed to sell Player One, a Toronto-based amusement services provider, to GENDA (Tokyo: 9166). axios.link/4iZeGf2

• Capgemini (Paris: CAP) is in advanced talks to buy outsourcing company WNS Holdings (NYSE: WNS), a New York-based outsourcer with nearly a $3b market cap, per Bloomberg. axios.link/3Ysfukh

• Harley-Davidson (NYSE: HOG) is weighing a sale of its financing arm, which could fetch $1b, per Bloomberg. axios.link/4ia3Hy0

🚑 Keros Therapeutics (Nasdaq: KROS), a Lexington, Mass., biotech with around a $400m market cap, is weighing a sale, per FierceBiotech. axios.link/42w8uUX

• Lucid Motors (Nasdaq: LCID) won a bankruptcy auction for Nikola's Arizona factory and other assets. axios.link/3YqgK7A

⚡Scania, a truckmaker owned by Volkswagen, agreed to buy the heavy-industry batteries unit of bankrupt Northvolt. axios.link/43OBw4l

• Arthur Ventures, a Minneapolis-based firm focused on B2B software, raised $395m for its sixth flagship fund, $205m for its fourth growth fund, and $200m for its first buyout funds, per SEC filings. arthurventures.com

• Bain Capital is targeting at least $7b for its sixth Asia-focused buyout fund, per Bloomberg. axios.link/3RIMnFF

• Martyn Curragh, former CFO and head of portfolio strategy at PwC, joined Warburg Pincus as a senior adviser. axios.link/3G2hZDz

• Gray Robinson joined Congruent Ventures as a partner. She previously was with Xplor Technologies. axios.link/42F1QwL

• Michael McHugh left Q Advisors to join the investment banking arm of Citizens as a managing director. axios.link/3YtRf5l