The domestic oil and gas boom of 2021 continues into May, driven by strong crude oil prices that most analysts think will get stronger, recovering global demand, and by fiscal discipline being practiced by the big shale producers. This combination of factors holds the promise of a big, record-setting year for the U.S. oil and gas sector.

How big could it become? International business intelligence firm Rystad Energy projects it could be the biggest year yet for U.S. shale. The firm issued a report this week projecting that the sector’s aggregated pre-hedging revenues could reach a record $195 billion during 2021, surpassing the previous record of $191 billion set during the previous big boom in 2019.

Rystad projects that hydrocarbon sales from wells in the Permian Basin alone could reach $110 billion, and also factors in estimates for all shale and tight wells in the Bakken, Niobrara, Marcellus and Anadarko regions of the country.

One important caveat, though: Rystad adds that the shale business might not reach record-setting revenue until 2022 due to losses suffered in hedging programs that tie some companies’ production to lower than current market prices. Also important: Rystad sees corporate fiscal discipline in the sector continuing throughout 2021, saying in a release that “While hydrocarbon sales, cash from operations and EBITDA for tight oil producers are all testing new record highs in the $60 per barrel WTI environment, capital expenditure is not growing exponentially as producers remain committed to maintaining operational discipline.”

Artem Abramov, head of shale research at Rystad Energy, adds, “Corporate reinvestment rates are generally expected to be in the 60-70% range this year due to debt servicing and hedging losses.”

So, while the industry will surely continue activating more drilling rigs during the final 8 months of 2021, no one should expect the current Enverus Daily Rig Count, which stands at 524, to rocket back up over 1,000, where it was during the last boom. A count of 650 to 700 by year’s end seems possible, though, and that would be a healthy situation for everyone involved.

The ongoing consolidation in the industry continued this week with another big merger. Interestingly, this one was not centered in the Permian Basin, where so much industry M&A activity has taken place over the past few years. Instead, it was focused on natural gas assets in the prolific Marcellus Shale region, the largest natural gas-producing basin in North America.

On Thursday, Pittsburgh-based EQT EQT +12.4% Corporation announced a $2.925 billion takeover of privately-held Alta Resources, a move that will provide EQT with a large footprint in the Marcellus Shale region sweet spot in Northeast Pennsylvania. The deal will add 1 billion cubic feet of natural gas production per day to EQT’s portfolio, and will generate $550-$600 million projected annual adjusted EBITDA for the company. As part of the deal, EQT also acquired significant midstream assets consisting of about 300 miles of owned and operated gas gathering lines with 630 MMcf/d throughput capacity, as well as a 100-mile freshwater system with 255 million gallons of storage capacity.

In an email, Senior M&A Analyst for Enverus Andrew Dittmar noted that the more positive economic outlook has had the effect of making privately-held companies like Alta more attractive takeover targets: “The splurge in private company buying is likely being fueled by a rosy outlook for economic activity in 2021 driving commodity prices higher,” Dittmar noted. “In addition, a strong rally in public E&P equities in late 2020 and early 2021 has shifted the value proposition between public and private acquisitions with public companies now appearing relatively more expensive. The improved stock prices also give public buyers a more potent currency when forking equity over to their private counterparts.”

Dittmar also notes that the same economies of scale and proximity of operations considerations that have driven so many recent Permian-based mergers are also key drivers to the EQT/Alta deal: Consolidating production and acreage has been a core focus for E&Ps looking to capture economies of scale and reduce their cost structure,” Dittmar said. “While in 2020 this nearly entirely took the form of public-public E&P consolidation, in 2021 the focus so far has been on rolling up private operators. That includes Enerplus’ purchase of Bruin E&P in the Bakken, Pioneer Natural Resources PXD +1.8% acquiring DoublePoint Energy in the Permian, and now this deal.”

Enverus expects the trend of consolidation across the shale basins to continue throughout 2021, citing the likelihood of strong commodity prices and the highly-fractured ownership in those regions, that Dittmar says leaves “…additional running room for further deals that should benefit producers by building economies of scale.”

These factors and more also leave additional running room for the U.S. oil and gas boom of 2021 to keep running into 2022. Buckle up.