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Chevron to buy Anadarko Petroleum in a $33 billion cash and stock deal

  

KEY POINTS
  • Chevron plans to acquire Anadarko Petroleum in a cash and stock deal the company valued at $33 billion.
  • The transaction values Anadarko at $65 per share, a 37% premium to Thursday’s closing price.
  • Chevron’s deal represents the 11th biggest ever for an energy and power company, according to Refinitiv.

Chevron announced on Friday it will acquire oil and gas driller Anadarko Petroleum in a cash and stock deal valued at $33 billion, marking one of the biggest energy sector mergers in years and a transformative moment for one of the industry’s dominant players. Read more…

Permian Basin Drillers Continue to Cash In on Their Infrastructure Bets

Investments in midstream assets have paid off for the region’s oil and gas producers.

Oil and gas companies have poured billions of dollars into developing the Permian Basin over the last several years. In addition to buying land and drilling more wells, many have invested in building out the necessary midstream infrastructure to move their growing production out of the region. That infrastructure investment has proven to be a smart one, as an increasing number of drillers are cashing in on these assets by selling them to private equity funds or midstream-focused companies for a significant premium to their initial investment.

Concho Resources (NYSE:CXO) and WPX Energy (NYSE:WPX) are the latest to cash in on a midstream investment; they both recently sold their stake in Oryx Midstream to private equity fund Stonepeak Infrastructure Partners. These sales highlight the value oil and gas producers are creating by investing in early-stage midstream developments.  

Ringing the register

Stonepeak Infrastructure Partners is buying Oryx Midstream from drillers Concho Resources and WPX Energy as well as private equity funds Quantum Energy Partners and Post Oak Energy Capital for $3.6 billion. Oryx operates oil gathering and transportation systems that move crude from wells in the Delaware Basin to longer-haul pipelines that take it out of the region. Read more…

A Flood of U.S. Oil Exports Is Coming

Bloomberg: By Javier Blas March 25, 2019, 10:01 PM MDT Updated on March 26, 2019, 9:50 AM MDT

American petroleum exports to overtake Russia within 5 years
Second wave of U.S. shale revolution to hit geopolitics: IEA

Oil trader Paul Vega is at the vanguard of shale’s next revolution.

Driving his pick-up truck through the heartland of the Permian basin — the vast tract of west Texas scrub where one of history’s greatest oil booms means miles-long traffic jams — Vega says there’s more crude being pumped than America’s refineries can absorb. Today, the primary task of trading houses like his is getting the stuff overseas.

“We buy it, we truck it, we put it on a pipeline, and there it goes to the port — and from there to the world,” said Vega, who heads the office of global commodities trader Trafigura Group in Midland, the region’s oil industry hub.

What started as an American phenomenon is now being felt around the world as U.S. oil exports surge to levels unthinkable only a few years ago. The flow of crude will keep growing over the next few years with huge consequences for the oil industry, global politics and even whole economies. OPEC, for example, will face challenges keeping oil prices high, while Washington has a new, and potent, diplomatic weapon. Read more…

Exxon-Chevron Permian slugfest expected to last years

Jordan Blum

Pressure pumps wait for hydraulic fracturing operations to begin at a Chevron drilling site Wednesday, July 19, 2017 in Midland. ( Michael Ciaglo / Houston Chronicle ) Pressure pumps wait for hydraulic fracturing operations to begin at a Chevron drilling site Wednesday, July 19, 2017 in Midland. ( Michael Ciaglo / Houston Chronicle )[/caption]

The nation’s biggest energy players, Exxon Mobil and Chevron, are emerging as the biggest competitors in the booming Permian Basin, and they’re set to duke it out in the region for more than a decade to come, analysts said Friday.

Earlier this month, Exxon Mobil and Chevron both said they planned to grow their Permian Basin production to about 1 million barrels of oil equivalent a day within five years, roughly tripling their current output.

“These players are set to increase collective output to over 2.5 million barrels of oil equivalent per day by 2030, leaving all well-established shale producers behind,” said Artem Abramov, head of shale research at Norwegian research firm Rystad Energy. Read more…

Exxon aims for $15/bbl costs in large Permian operation

World Oil: By Kevin Crowley on 3/14/2019

HOUSTON (Bloomberg) — Exxon Mobil plans to reduce the cost of pumping oil in the Permian to about $15/bbl, a level only seen in the giant oil fields of the Middle East.

The scale of Exxon’s drilling means that it can spread its costs over such a big operation that the basin will become competitive with almost anywhere in the world, Staale Gjervik, president of XTO Energy, the supermajor’s shale division, said in an interview.

Development, operating and land acquisition costs will be “in and around $15/bbl,” he said on the sidelines of the CERAWeek Conference by IHS Markit in Houston. “The way we are approaching it is very unique compared to most, if not really everybody out there, as far as the scale.”

The shale revolution has made the Permian into the world’s largest shale field, with production topping 4 MMbpd, almost as much as Iraq, OPEC’s second-biggest member. But the rapid growth has often meant that producers burn cash flow to reinvest in the expansion, prompting investors to call on them to focus more on returns in 2019.

Exxon plans to deploy 55 rigs in the Permian this year, by far the most of any driller, as it aims to increase output in the region fivefold to about 1 MMbpd by 2024. Its strategy also includes building its own takeaway infrastructure from separation tanks to pipelines, and it’s even joining a giant conduit project to make sure its oil doesn’t get stuck in bottlenecks that have depressed prices in West Texas. Read more…

U.S. Supermajors Could Form A New Oil Cartel

rig 2

The ambitious shale growth plans of the U.S. supermajors could in the future allow them to control so much of U.S. shale oil production that they could also control the price of the U.S. light tight oil going to foreign markets in an ‘OPEC of their own kind,’ Investing.com quoted John Kilduff, founding partner at Again Capital, as saying.

If the U.S. supermajors, such as Exxon and Chevron, end up controlling a lot of the U.S. shale production with their plans to significantly boost Permian production, and if smaller shale players bleed cash and decide to sell acreage and operations to Big Oil, then supermajors could be the ones determining the price of light crude oil, according to Kilduff.

Exxon and Chevron both announced increased targets for their Permian production last week. Chevron now sees its Permian unconventional net oil-equivalent production rising to 600,000 bpd by the end of 2020, and to 900,000 bpd by the end of 2023. Exxon revised up its Permian growth plans to produce more than 1 million oil-equivalent barrels per day by as early as 2024, which would be an increase of almost 80 percent. Read more…

Royal Dutch Shell Is Looking to Bulk Up Its Position in the Permian Basin

The global energy giant is trying to keep up with its big oil peers.

Permian Basin oil output seen doubling to 8 million barrels in four years, boosting US exports

Key Points
  • A shortage of pipeline space created a bottleneck for oil coming from the hottest US shale basin, but that is about to end with a big expansion of capacity that will help send more US crude into the Gulf Coast and out onto the world market.
  • The oil and gas industry is building out pipelines as drillers expect to up their output from the Permian to where it could double over the next four years, to 8 million barrels a day. That’s more than all of the oil the U.S. produced just six years ago.
Oil operations in the Permian Basin near Midland, Texas - Nick Oxford | Reuters

Oil operations in the Permian Basin near Midland, Texas - Nick Oxford | Reuters

As if stuck in a partially clogged drain, oil from the hottest U.S. shale play has been caught in a bottleneck due to a lack of pipeline capacity.

But the transportation tie-up at the Permian Basin is about to ease up, and a new network of pipelines will help U.S. producers unleash more crude into the Gulf Coast and then onto the world market. Read more…

Booming Permian Rewriting Rules For Global Oil Industry

Dan EberhartEnergy
A pump jack stands at dusk in the Permian Basin area in Texas, U.S. Photographer: Angus Mordant/Bloomberg© 2018 Bloomberg Finance LP

A pump jack stands at dusk in the Permian Basin area in Texas, U.S. Photographer: Angus Mordant/Bloomberg© 2018 Bloomberg Finance LP

Conventional wisdom used to be that as the major integrated oil companies acquired smaller independents, production growth in the Permian Basin would slow. The same wisdom held that regardless which companies were operating in the Permian and other shale plays, domestic U.S. production would peak in the mid-2020s and then begin to decline.

It’s time to reassess those assumptions.

Bullish projections this week from Exxon Mobil and Chevron on their separate operations in the Permian are rewriting the conventional wisdom about that basins potential. Read more…

ExxonMobil, Chevron ramp up Permian oil output

ExxonMobil and Chevron are both planning to increase production of unconventional oil in the Permian fields within the next four years. Photo courtesy of Lalabell68/Pixabay.

ExxonMobil and Chevron are both planning to increase production of unconventional oil in the Permian fields within the next four years. Photo courtesy of Lalabell68/Pixabay.

March 6 (UPI) — ExxonMobil will surpass one million oil-equivalent barrels per day production in the Permian basin by 2024, an 80 percent increase, while Chevron separately announced it will increase its Permian output to 900,000-barrels-per-day in 2023.

“Our plans are attractive at a range of prices and we expect them to drive more value as we continue to lower our development and production costs,” Neil Chapman, senior vice president at ExxonMobil, said Tuesday

ExxonMobil’s investments in the Permian Basin will produce returns even at low oil prices. At a $35 per barrel oil price, for example, Permian production will have an average return of more than 10 percent, the company said.

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