It’s only natural that deals like Chevron’s $7.6 billion acquisition of PDC Energy and ExxonMobil’s $4.9 billion purchase of Denbury attract market attention. After all, shoppers are household names to everyone, even those who only think of hydrocarbons when they fill up at their local gas station. But there’s also a lot of other, lower-profile M&A action happening, especially in the Permian and also in the Eagle Ford. You could say that these are cases of “Eat or be eaten” or, in a recent case, “Eat i be eaten.” In today’s RBN blog, we discuss Permian Resources’ plans to acquire Earthstone Energy; Civitas Resources to buy assets in the Permian’s Delaware and Midland basins from Tap Rock Resources and Hibernia Resources, respectively; and SilverBow Resources to pick up Chesapeake Energy’s last remaining assets in the Eagle Ford.
Until the late 2010s, we anticipated that there would be major consolidation among E&Ps as the oil and gas industry matured, private equity-backed producers cashed in, and major E&Ps sought to optimize their efficiency by increasing its operations. The M&A boom had begun and since then, we’ve covered many of the hottest deals in the RBN blogosphere; so far in 2023, we have published Harder better faster stronger, Comeback song i What I love about Texasnot to mention recent, deal-specific blogs Chevron/PDCwhich will give Chevron a strong base in the Denver-Julesburg (DJ) Basin and ExxonMobil/Denburywhich will propel Exxon forward in the super-hot specialty of carbon capture and sequestration (CCS).
Permian resources/Earthstone Energy
Well, the M&A just keeps on coming, as evidenced most recently by Permian Resources’ announcement last Monday (August 21) that it will acquire Earthstone Energy, the very focus of a M&A blog last year — in an all-stock deal valued at about $4.5 billion. As shown in Figure 1, Permian Resources is already a major player in the Permian Delaware Basin, where it controls about 180,000 net acres (light pink areas), mostly in Reeves and Ward counties in West Texas and Eddy and Lea counties in southeastern New Mexico, and produces about 166,000 barrels of oil equivalent per day (166 Mboe/d). Earthstone, in turn, has about 223,000 net acres (dark pink areas)—56,000 of them in the Delaware and 167,000 in the Midland Basin—and produces about 133 Mboe/d. Most of Earthstone’s acreage and production is in Eddy County (NM) and Culberson County, TX, Reagan and Irion Counties in Delaware and West Texas in Midland.
Figure 1. Surface of Permian resources and Earthstone Energy. Source: Permian Resources
