Forbes - Next Permian Basin Acquisition Target?

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Hawker99
Posts: 27
Joined: Mon Jul 16, 2018 1:06 pm

Forbes - Next Permian Basin Acquisition Target?

Post by Hawker99 »

Robert Rapier - Contributor Energy

Following the news that Chevron had agreed to pay a nearly 40% premium to acquire Anadarko Petroleum, investors quickly bid up the shares of other potential acquisition targets.

As I argued in the previous article, I believe the Permian was the key to the Anadarko acquisition, but there are plenty of other targets in the region. There are also several companies with the capability of making acquisitions.

In recent years, the few mergers and acquisitions in the oil and gas industry have been largely focused on the Permian Basin. The supermajor integrated oil and gas companies have been increasingly making forays into the Permian.

In addition to Chevron's new acquisition, in 2017 ExxonMobil paid $6.6 billion to acquire Permian acreage from the Bass family of Fort Worth, Texas. ExxonMobil also spent $41 billion in 2009 to acquire XTO, which has a major presence in the Permian.

Permian Players

Today major acreage holders in the Permian Basin include the supermajors Chevron and ExxonMobil, as well as Occidental, Apache and Concho Resources. Occidental, in fact, reportedly attempted to acquire Anadarko prior to Chevron sealing the deal. But Occidental may now find itself in the crosshairs of a bigger player looking to shore up their Permian portfolio.

But there are many other major producers in the region, including ConocoPhillips, EOG Resources, Pioneer Natural Resources, Noble Energy, Devon Energy, and Diamondback Energy. Smaller producers in the region include WPX Energy, Parsley Energy, Cimarex Energy, Callon Petroleum, Centennial Resource Development, Jagged Peak Energy and Laredo Petroleum.


Let's first take a look at the largest companies operating in the Permian according to enterprise value. This metric is preferred over market capitalization, because it includes a company's debt. In the case of a potential acquisition, the acquiring company would be responsible for this debt in addition to the purchase price. Hence, it is a more comprehensive representation of a company's market value.

I have included the integrated supermajors that could have the ability to make major acquisitions, three of the larger exploration and production companies (which could make an acquisition or be a target themselves), and Anadarko for comparison. All data were retrieved from the S&P Capital IQ database.

( Visit the link to see the chart and rest of the analyses, they are too big to load in this message)

https://www.forbes.com/sites/rrapier/20 ... 4c81bf5b8e
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Forbes - Next Permian Basin Acquisition Target?

Post by dan_s »

Robert Rapier is an EPG member.
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By Svea Herbst-Bayliss and Jessica DiNapoli

NEW YORK, April 16 (Reuters) - Corvex Management manager Keith Meister on Tuesday named Diamondback Energy Inc. one of the hedge fund's top investment picks after the energy company bought a rival last year.

"We think there is lots of value," Meister said at the 13D Monitor Active-Passive Summit. He said he expects Diamondback's management team will do all the right things to boost returns.

Chevron’s planned acquisition of Anadarko announced last week marked a turning point for oil and gas exploration and production companies, Meister said.

"I would not have pitched this idea one week ago,” he said, adding that the pace of takeovers is likely not over yet.

"I think there is going to be a lot of activity" in the sector, he said.

Diamondback acquired rival Energen, another Corvex activism target, in a $9.2 billion deal last year. Meister said Diamondback has still been underperforming, however.

When Meister spoke about Energen last year, he said that investors need to be patient and noted that by waiting until Diamondback made its move, "the size of the prize went up."

Investors have not paid enough attention to the energy and production sector, Meister said.

"No one owns energy stocks, but if you do own them, you have to be in one place, the Permian basin," he said, referring to the oil-rich region in West Texas where Diamondback has operations.

Diamondback and rivals Pioneer Natural Resources Co. and Concho Resources will likely not be independent companies three to five years from now, he said.
Dan Steffens
Energy Prospectus Group
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