Ask anyone in the oil and gas industry about what’s hot these days and chances are good they’ll tell you the Permian Basin in West Texas and New Mexico. It’s with good reason: There’s a lot of recoverable oil there – 60 billion to 70 billion barrels by IHS Markit’s reckoning, double what’s already been produced. And it can be brought to the surface pretty cheaply, giving its producers a high rate-of-return, even at lower oil prices.
For some companies, that might mean considering taking some money off the table, which could spur more dealmaking in the basin this year.
Analysts at Seaport Global Securities recently returned from meetings with private companies in Midland and learned that several deals are about to be hatched in the Delaware portion of the basin. One executive even speculated that there might be four to five deals announced in the next six weeks.
The analysts think that Royal Dutch Shell and Concho Resources have multiple packages for sale in Ward County, Texas, and that their positions – about 20,000 acres in total – will be “snatched up” by a mix of private and public companies. They join onetime bankrupt Vanguard Natural Resources, which announced earlier this month that it’s selling 1,700 net acres in the county. Read more…