Energy Analytics Intelligence Publications

Permian gears up for M&A bonanza as PE steers toward the exits

byAndrew Dittmar

This article originally appeared in the Enverus Weekly Market Pulse Report.

Last week’s $4.3 billion acquisition of three Midland Basin-focused EnCap portfolio companies by Ovintiv was the biggest Permian deal since ConocoPhillips bought Shell’s assets in September 2021 and kicked off 2Q23 M&A with a bang. Ovintiv shareholders didn’t seem to mind the scale and price tag of the transaction in the least, as the company’s stock rallied 12% after the deal was announced and finished the week up 8%. See more in Enverus Intelligence® | Research’s Deal Insight report.

The sales come on top of an already strong market for private equity sellers in the Permian with the late 2022 sales of FireBird Energy and Lario Oil & Gas assets to Diamondback Energy, plus EnCap’s sale of Advance Energy Partners to Matador Resources earlier this year. Private equity firms are hoping public company enthusiasm for deals remains intact, as last week saw a torrent of media reports that firms were launching processes. EnCap will be looking to continue its sales streak by taking Novo Oil & Gas and Forge Energy II into the market. Both operate in the Delaware Basin with Novo focused on the northern and western portions of the play while Forge operates in the south. Peer NGP will also be looking to cash in, per reports that it is marketing Tap Rock Resources I and II, also in the Delaware, and Hibernia Resources III in the southern Midland Basin. The sales efforts are likely motivated by the confluence of strong pricing for inventory — more than $2 million per location for the best drilling opportunities — and an optimal time in the lifecycle of these companies to exit. While these sales processes were almost certainly planned ahead of OPEC’s surprise production cut a week ago, that adds further fuel to the fire and increases the probability of $100-plus oil this year.

These firms aren’t necessarily exiting oil and gas, with Reuters also reporting that EnCap is looking to raise another upstream fund for the first time in years. However, whether because of a lack of opportunities in maturing shale plays or a lack of capital, the portfolio of private equity E&Ps isn’t being replenished at nearly the pace M&A is drawing it down. The result is a far more consolidated Permian Basin and other areas where the rich get richer as large companies with significant cash are in the best position to compete for deals.

The next logical step after private consolidation is deals among the public companies themselves. Even the biggest Permian independent isn’t immune to buyout rumors as, along with the PE-focused M&A talk last week, The Wall Street Journal reported that Pioneer Natural Resources had held some preliminary talks to be acquired by ExxonMobil. All of this seems to point toward an industry that looks increasingly like it did before shale in the context of the biggest companies and majors holding the best, lowest-cost resource. Watching that unfold should certainly provide plenty of fireworks along the way.

10-most-recent-upstream-deals-disclosed-values-over-10-million-dollars

Interested in receiving more information like the article above? Fill out the form below to learn more about Enverus Intelligence Publications, your source for daily, weekly, and monthly news and highlights about the energy industry.

About Enverus Intelligence Publications
This news is brought to you by Enverus Intelligence Publications. With so many voices in the market, it is hard to know who to trust. Enverus Publications provides daily, weekly and monthly detailed summaries that cut through the noise, delivering timely insights across various topics from a source who understands the energy industry.

Andrew Dittmar

Andrew Dittmar

Andrew Dittmar is a Director on the Enverus Intelligence team. Andrew specializes in deal analysis, research and valuations for upstream assets. He focuses largely on placing individual deals into context around broader industry trends and outlooks, and has been quoted by Reuters, CNBC, the Wall Street Journal, Houston Chronicle and other media outlets. Andrew holds a BBA in Finance from Texas A&M University and a JD from The University of Texas School of Law.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

Group-Shake-Hand
Intelligence Publications
ByErin Faulkner

Operators in Oklahoma’s SCOOP and STACK plays have been improving their economics with “super pads,” which contain wells completed with more than 3,100 lb/ft of proppant, according to Enverus Intelligence® | Research (EIR). The resulting uptick in productivity can shave...

emissions-flare-women-working
Energy Analytics Energy Transition
ByKevin Runciman

In recent years, the oil and gas industry has witnessed a remarkable shift in focus towards environmental performance, driven by the growing importance of environmental, social and governance (ESG) considerations. Among the various environmental concerns, reducing flaring has emerged as...

CCUS-GettyImages-1056200534
Energy Analytics Energy Transition
ByAndrew Gillick

In case you missed it, Enverus virtually hosted EVOLVE, our flagship conference, May 16-17. The event included two full days of presentations, panels and keynotes, distilling the most relevant data and thoughts on the industry today.  Below Andrew Gillick, managing director...

blog-refinancing
Energy Analytics Other
ByShane Reddell

In the current landscape of heightened environmental and social consciousness, upstream oil and gas companies face significant challenges in achieving favorable refinancing for their existing credit facilities. These challenges are compounded by the recent volatility in the debt markets and...

unprecedented-wildfire-season-singes-alberta-oil-production
Energy Analytics Intelligence Publications
ByMaurice Smith

Wildfires that have already scorched more than double the average annual fire destruction across Alberta forced the shut-in of more than 300,000 boe/d while threatening future shuttering of output from the so-far largely unaffected oil sands region. Record temperatures saw...

ccus-risky-business-post
Energy Analytics Energy Transition
ByHeather Leahey

CO2 containment risk has become one of the most popular topics among our clients evaluating CCUS projects. Operators need to understand and evaluate subsurface features that could trigger CO2 migration and containment losses as well as introduce additional safety, reputational...

ev-parent-image
Energy Analytics Energy Transition
ByRyan Luther

Anyone who thinks spending time at a public charging station is a blocker to buying an electric vehicle (EV) might want to consider the numbers behind EV and internal combustion engine (ICE) vehicle refueling times. The answer is that it...

Enverus Blog - 6 tax preparation tips for mineral and royalty managers
Energy Analytics
BySilas Martin

Recent years have been a roller coaster for mineral buyers, from record low commodity prices to highs for oil and natural gas in the last year. Going forward, challenges and opportunities will be plentiful. We expect oil prices between $80...

wind-power-energy-woman-trader-stock
Power and Renewables
ByKenneth Curtis

It’s that time of year when generator and transmission outages are at their peak in PJM. The first half of April has not disappointed volatility-wise as the WHUB/NIHUB spread has set new 30-day highs largely driven by congestion. Figure 1:...

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Access Product Tour

Speak to an Expert