Another Permian Basin company for sale - Aug 7

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from OilPrice.com

American Shale Consolidation Continues with Rumors of Another Sale
By Michael Kern - Aug 07, 2024, 2:00 PM CDT

Franklin Mountain Energy, a privately held company, is reportedly exploring a sale of its Permian basin assets, potentially valued at around $3 billion.
The consolidation trend in the American shale patch continues, with several major deals in recent months, including Exxon's acquisition of Pioneer Natural Resources and Chevron's acquisition of Hess Corp.

Despite concerns that consolidation could dampen Permian basin output growth, production has remained strong, with increased efficiency and producers raising output guidance.

As consolidation in the American shale patch continues, Bloomberg has cited unnamed sources as saying that Franklin Mountain Energy is gearing up to be the next sales target in Texas’ Permian basin.

Led by refining billionaire Paul Foster, Bloomberg reported on Wednesday that sources close to the matter say Franklin Mountain has hired Jefferies FInancial Group Inc to manage the sale of the refiner, with price expectations at around $3 billion.

Denver-based Franklin Mountain Energy is one of the last privately held holdouts in the Permian, with assets in a prime high-growth area.

Franklin Mountain Energy has not confirmed the Bloomberg report.

Over the past 12 months, we have seen a major consolidation push in the American shale patch, with a lineup of megadeals, including Exxon’s acquisition of Pioneer Natural Resources and Chevron’s acquisition of Hess Corp. While the Chevron-Hess deal has met with significant hurdles over Exxon’s insistence it has the right of first refusal over Hess’ share of their Guyana operations, the consolidation push has refused to press pause.

Most recently, last week, Vital Energy (VTLE), in partnership with Northern Oil and Gas Inc., reportedly struck a deal with private equity-backed Point Energy Partners to buy its Permian assets for $1.1 billion.

The Permian basin is expected to reach peak production in the early 2030s.

There is some cause for concern among analysts that the consolidation push could dampen Permian basin output growth, citing rig cutbacks that have followed mergers, with more anticipated. Despite this, there has been record production in the Permian, with increased efficiency across the American shale patch and U.S. producers raising output guidance and talking about plans to grow output further.

By MIchael Kern for Oilprice.com