US oil producers are expected to increase M&A this year, especially in the Pemian Basis
US oil producers are expected to seek to make deals in the oil sector this year due to concerns that the best drilling sites are becoming scarcer.
There has been a huge increase in activity recently weeks as buyers and sellers get ready for deals after limited activity in recent years, the Financial Times reported on Sunday, citing bankers and lawyers.
Pete Bowden, Jefferies’ global head of energy, told the FT there will be a “batch” of M&A this year.
According to the FT, citing consulting firm Enverus, the increase in transactions is expected to come after just 13 deals last year, the lowest since 2005.
Last year’s big deals included Diamondback Energy (FANG) purchase Rattler Middstream for ~$2.2 billion and Diamondback in November agreed to buy back all rental interest and related assets of the holding companies. FireBird Energy for 5.86 million common shares and $775 million in cash. Marathon Oil (MRO) in November agreed to purchase the Eagle Ford shale property in south Texas from Ensign Natural Resources for $3 billion, nearly doubling its position in the basin near the company’s legacy holdings. And last month, VTX of Vitol agreed to buy back Delaware Basin Resources.
Buyer and seller activity is expected to pick up in the second quarter, especially among private equity firms, the FT reported.
According to the report, the most likely targets are expected to be publicly traded oil and gas producers with a market capitalization of less than $10 billion.
Last month Permian Resources (PR) has agreed to buy acreage in New Mexico for $98 million and $70 million worth of assets sold.