M&A for U.S. oil producers expected to pick up, especially in Permian Basin - report
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U.S. oil producers are expected to be looking to do deals in the oil patch this year on concern that the best drilling sites are becoming more scarce.
There has been a large uptick in activity in recent weeks as buyers and sellers are readying themselves for deals after limited activity in recent years, according to a Financial Times report on Sunday, which cited bankers and lawyers.
Pete Bowden, global head of energy at Jefferies, told the FT that there's going to be a "raft" of M&A this year.
The expected increase in transactions comes after there were only 13 deals last year, the lowest since 2005, according to the FT, which cited consultancy Enverus.
The major deals last year included Diamondback Energy (FANG) purchasing Rattler Midstream for ~$2.2 billion and Diamondback in November agreed to acquire all leasehold interest and related assets of closely-held FireBird Energy for 5.86M common shares and $775M in cash. Marathon Oil (MRO) in November agreed to acquire assets from the Eagle Ford shale in south Texas from Ensign Natural Resources for $3B, nearly doubling its position in the basin near the company's legacy holdings. And last month, Vitolâs VTX agreed to acquire Delaware Basin Resources.
Buyer and seller activity is expected to increase in the second quarter, especially among private equity firms, the FT reported.
The most likely targets are expected to be publicly traded oil and gas producers with market caps of less than $10 billion, according to the report.
Last month, Permian Resources (PR) agreed to buy New Mexico acreage for $98 million and sell $70 million in properties.
Also see SA contributor Jennifer Warren's video interview from last month entitled "Energy Drive: Efficiency, Scale And Collaboration (Video Interview)."