The last three days has seen three deals in the Permian ranging from a small $775 million to a $5.6 billion dollar deal. The general consensus in oil exploration world is that the Permian shale play affords oil companies the best opportunity to produce oil profitably at $50 – $60 range.
The three deals so far this week are:
- WPX Energy has agreed to pay $775 million to expand its Permian Basin holdings to more than 120,000 net acres.
The purchase will also expand the company’s drilling inventory by adding more than 900 gross drilling locations in the Permian’s Delaware Basin in West Texas, the Tulsa-based company announced last week.
- Exxon Mobil is joining the land rush in the prolific Permian Basin.
Exxon Mobil announced Tuesday it will pay $5.6 billion in stock to acquire companies owned by Texas’ Bass family that control parts of the Permian in New Mexico. The purchase roughly doubles Exxon’s holdings in the basin, adding acreage with an estimated 3.4 billion barrels of oil equivalent.
- Noble Energy is acquiring Midland, Texas-based Clayton Williams Energy in a $2.7 billion cash-and-stock deal, expanding its Delaware Basin footprint.
While the outlook is better for E&P Companies, they will be facing a new challenge rising costs from vendors. During the downturn, vendors to the industry took significant cuts in what they charged. That is now changing. The prices are increasing because of demand.
The labor shortage in the O&G industry is also causing costs to increase. Many vendors are having a hard time finding workers. The situation will be exasperated as production continues to increase.
We’ll keep you posted