June 2014 was a good month for acquisitions and divestitures (A&D). It was the month 2013 finally stopped.

June might have turned a lackluster start to the year into a rebound toward better and bigger deals.

Globally, the U.S. and Canada remained the center of deal activity in the first half of 2014—accounting for 61% of all transactions, according to a report by Deloitte LLP. Much of the investment in the U.S. continued to focus on unconventional shale projects, while Canada saw a move to more conventional plays and away from oil sands.

Since the frenzied fourth-quarter 2012 saw a huge value of deals, producers have focused on developing the properties they acquired.

“Management teams are generally focused on organic growth and cost containment,” said John England, vice chairman, U.S. Oil & Gas Leader at Deloitte. “They have a drilling inventory that will last for several years, so they would rather put their money into development than acquisitions.”

Sluggish deal activity in 2013 is showing signs of turning around. Price pressures on commodities are likely to drive more deals and private equity will likely continue to invest.

Total deals in the first half of 2014 dipped, by one, from the 300 completed in the same period a year earlier. However, the combined value of all deals globally increased 38% to $141 billion. The U.S. and Canada accounted for 61% of the tally. Deloitte only counts deals with values greater than $10 million.

Still, the two countries’ dominance in the global A&D market has waned, falling from 67% in 2012. Asia and South America have steadily increased their share of the deal count, with South America rising 50%.

U.S. operators are also dealing with higher crude prices. While they benefit producers, development costs escalated, putting pressure on company earnings and free cash flow.

“Largely because of geopolitical unrest that has curtailed production from Libya, Iraq and Iran, commodity prices have remained relatively high for the first half of the year, and expectations for continued upward pressure on prices for the remainder of the year may make producers less likely to part with assets,” England said.

With the need to deploy cash for developing their existing properties, companies have less money to shop for acquisitions.

Lower profits per barrel of oil also mean more properties fall below the return buyers want.

According to data from Morgan Stanley, the average production cost for a barrel of oil (bbl) declined in 2013, to nearly $6/bbl, from $8.50/bbl in 2012, showing that producers’ cost-cutting efforts are on track.

However, development costs have risen, as have taxes. The cost per barrel has been pushed to nearly $70/bbl from $63/bbl in 2011. Rising costs are squeezing margins, and free cash flows have narrowed to just $2/bbl from nearly $5/bbl in 2011. That’s despite an increase in revenue.

Producers are forced to focus on fewer fields or reservoirs and wring every dollar of return out of their wells.

“You’re going to see companies selling assets to make sure they are investing the capital that they have in their most important projects,” said Melinda Yee, partner, M&A (mergers and acquisitions) transaction services at Deloitte.

For instance, Freeport-McMoRan sold Encana Corp. its 45,500 net Eagle Ford position in South Texas to concentrate on development of the Gulf of Mexico. Encana itself spent the first half of the year selling off gas assets.

However, E&P focus is vital for investors. The days of being lauded for wedging into another shale play are over.

Investors simply want greater returns. A primary source of E&P pressure is activist shareholders, who have pressured them to divest assets through spinoffs or sales. That might help contribute to a rise in deal activity in the second half of 2014.

Oilfield services companies have felt the pain of such decisions. Deals were scarce in the first half of 2014 as E&Ps contained costs. Oilfield services deals fell by 35%, to 37 in the first half of 2014 from 57 in the first half of 2013.

Deal value was buoyed 22%, or $14 billion, largely due to a trio of deals that were among the top 10 for 2014. Two of the deals were in Europe and the other was a North American deal—C&J Energy Services Inc.’s merger with Bermuda's Nabors Industries Ltd. for $2.86 billion in cash and stock.

“Overall, companies continue to look to acquire resources with a focused approach, and private equity continues to search for new oil and gas investments,” the report said.

The outlook for natural gas has recovered to some extent as prices have remained somewhat stable. Any increased demand from LNG exports might draw new buyers to the market, though it’s an open question how much gas LNG will draw in the short term.