Soft oil prices, strained balance sheets and a lack of support from outside funding sources have left many US independent oil and gas companies close to bankruptcy. For some, joining forces may be a way to stay solvent.

Most independent producers entered 2020 on unstable footing. The oil price crash and collapse in demand as a result of the COVID-19 pandemic drastically worsened their predicament, and a slow economic recovery has left many facing massive financial and operational cuts well into 2021.

"Consolidation makes sense — economies of scale will enable firms to lower supply costs; less fragmentation will ensure more efficient response to price signals and inventory constraints," Morningstar analyst David Meats said.

Supermajors could look to snatch up a few appetizing independents and mergers of equals could continue to occur, Meats said, but "modest to zero premiums" should be expected.

Chevron's $13 billion purchase of independent producer Noble Energy, the biggest post-pandemic merger in the energy space, showed that traditional consolidation through acquisitions remains a possibility for the industry.

However, the September announcement that Devon Energy and WPX Energy would combine in a $12 billion, all-stock merger of equals also indicates that companies of similar size and with overlapping operations could look to join forces instead of slogging through on their own.

"Industry consolidation is becoming paramount," said Matthew Portillo, the managing director in the exploration and production sector for Tudor Pickering Holt & Co. "Most major plays, with the exception of the Permian and maybe the Marcellus [Shale], need only one or two champions."

Speaking at a webinar in September, Portillo speculated that widespread industry consolidation could result in 10 to 15 large public companies, including four to five small to mid-cap players.

"There's a very good chance that consolidation will take down 60% to 80% of the companies we cover," Portillo said.