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Forbes.com : Business : Wood Mackenzie Contributor  : APR 30, 2018 @ 04:38 AM

Motives for both the tight oil ‘haves’ and ‘have nots’

The best accessible upstream growth opportunity in fifty years? US tight oil. Correction: the Permian Basin. Second correction: the Wolfcamp formation spread across the Delaware and Midland sub-basins.

It’s this play that drives most of the growth in tight oil, from 5 million b/d today to the 10 million b/d we forecast in the middle of next decade. No surprise then, that those already big in the play want more of it.

But does Concho Resources’ acquisition of RSP Permian for US$9.5 billion – the biggest deal yet – signal the start of Permian consolidation?

I caught up with Ben Shattuck, Research Director, US Lower 48.

Q. Ben, is Concho doubling up on what it does best?

That’s the obvious answer. Merging two Permian tight oil specialists brings scale (the largest rig program in the Basin) and synergies that Concho estimates at US$2 billion. That’s a very ambitious target in our view to be extracted from rationalising central costs, high grading drilling inventory and leveraging technical expertise, such as longer laterals from larger pads. 

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