The deal is the latest in a string of mergers in the U.S. oil patch as shale basins age and companies push to line up future drilling sites.
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U.S. Merger Boom Could Slow Shale Production Growth The takeover of smaller Permian players by large publicly traded companies could slow down production growth. The booming activity in mergers and acquisitions from 2023 has led to a growing number of smaller privately held companies being absorbed into large corporations. Growth at all costs is preceded by shareholder returns, share price performance, and debt reduction, leading to slower drilling activity.
U.S. Merger Boom Could Slow Shale Production Growth | OilPrice.com
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#bigoil #M&A The merger mania in the U.S. shale industry has set the stage for steadier oil prices, analysts say. As producers become bigger, they focus on shareholder returns and wouldn't be inclined to respond to every price spike with a major boost in drilling that ultimately floods the market with oil and depresses prices. This relentless drilling for higher production has been the shale industry's modus operandi for a decade before Covid and the demand and market crash. Until 2020, many smaller producers sought to maximize output and price realizations whenever oil was heading higher. But as the industry matured and balance sheets and market valuations strengthened after the record-high earnings of 2022, a wave of consolidation began towards the end of 2023. The big companies are looking to become bigger by adding premier assets of the takeover targets to their portfolios. And the merger wave is far from over, many market observers say. "What we're seeing now is because of the consolidation, you're getting larger companies who have control of more of the oil in the US and are going to be able to execute on moderate low to mid-single digit oil production growth," Jason Gableman, an analyst at TD Cowan, told Yahoo Finance last week. This "should result in a healthier commodity backdrop where they'll be less responsive to spikes in oil prices and support higher and more stable oil prices," Gableman added. The consolidation is set to continue, many analysts say, with increased deal-making in shale plays other than the Permian, which commands high prices and has little acreage at reasonable prices left for acquisitions. Deal value so far this year has already surpassed the total deal value of $69 billion recorded for the entire first half of 2023, Atul Raina, Vice President of Upstream M&A Research at Rystad Energy, wrote in an analysis last week. Source; OilPrice.com https://lnkd.in/edJZzEqV
U.S. Shale Mergers Could Bring Steadier Oil Prices | OilPrice.com
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As mergers and acquisitions heat up in the U.S. shale industry, U.S. oil and gas producer Devon Energy is looking to purchase Enerplus, anonymous sources told Reuters on Thursday. The potential tie-up would see the $3 billion valued Enerplus acquired by $30 billion Devon Energy, adding to the string of other mergers and acquisitions in the North American oil and gas industry, including megadeals such as Exxon’s acquisition of Pioneer Natural Resources and Chevron’s acquisition of Hess, along with Occidental’s purchase of CrownRock, Exxon’s purchase of Denbury, and Chevron’s acquisition of PDC Energy. The sources were clear that a deal was being discussed, but there was no certainty that a deal would for sure be reached. Enerplus has assets in North Dakota’s Bakken and Pennsylvania’s Marcellus basin. Devon already has a presence in North Dakota, and an acquisition of more North Dakota assets will help spread out its reliance on other basins, such as the Delaware. Enerplus already sold its Canadian assets back in 2022 as it shifted focus on its assets in the United States—in retrospect a seemingly wise move that allowed it to return more than $300 million to shareholders last year. Enerplus, however, has been criticized for its high spend on maintaining current levels of production. Devon, too, ditched its entire Canadian business back in 2019 to Canadian Natural Resources—like Enerplus, it wanted to shift focus to the United States. Enerplus is trading down year over year but perked up on Thursday on news of the possible deal, climbing by 7.54% on the day. Devon shares are also down from this time last year, but were trading up by nearly 2% on Thursday afternoon. https://lnkd.in/gewENKWe
Another Merger Being Explored in the U.S. Shale Space | OilPrice.com
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【Overview of the Article】 “3 Bold Predictions for the Oil Market in 2024” outlines scenarios including U.S. shale industry suppressing oil prices through efficiency gains, continuation of mergers and acquisitions with a potential Devon Energy and Marathon Oil merger highlighted, and despite price volatility, the industry, including giants like Chevron, maintaining profitability. These predictions reflect anticipated dynamics and investment strategies in the oil market. What do you think? Can you think of any other scenarios? 【Link to the Article】 https://lnkd.in/e9Dh9STp
3 Bold Predictions for the Oil Market in 2024
finance.yahoo.com
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MERGERS & ACQUISITIONS Occidental Petroleum in Talks to Buy CrownRock - Read More: https://hubs.la/Q02btPtX0 Occidental Petroleum Corp. is in talks to buy shale driller CrownRock LP, according to the Wall Street Journal, as the consolidation wave in North America’s most prolific oil field gathers momentum. A deal for @CrownRock could be valued above $10 billion including debt and could come together soon, the newspaper reported, citing people familiar with the matter. #mergersandacquisitions #oilandgascompanies
Occidental Petroleum in Talks to Buy CrownRock - Energy News, Top Headlines, Commentaries, Features & Events - EnergyNow.com
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A big bet on human ingenuity versus basin maturity and decline rates? US Shale Buying Binge Spells Slower Production Growth Acquirers are setting aside drilling sites for the future. With US shale production likely peaking sometime in the 2030s, companies are keen to capture all the core acreage they can in the Permian and other basins to extend their runway of drilling locations.
US Shale Buying Binge Spells Slower Production Growth
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Despite a significant production boost in 2023, sustained growth is uncertain due to declining well productivity and increasing costs. Ongoing mergers and acquisitions in the shale industry are consolidating control and could impact future production growth rates. Just because efficiency gains boosted production in 2023, it does not mean the boost will be repeated this year.
Shale's Efficiency Boost Is Not Guarantee of Strong Future Growth | OilPrice.com
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The second half of 2023 saw accelerated consolidation in the U.S. shale industry, with expectations for more mergers and acquisitions in 2024, focusing on the Permian Basin.
Crude Oil Prices Today | OilPrice.com
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𝐏𝐞𝐫𝐦𝐢𝐚𝐧 𝐁𝐚𝐬𝐢𝐧'𝐬 𝐄&𝐏 𝐂𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 that want to be bought out can take as an encouraging sign the 14% premium in #APA Corp.'s proposed $4.5B deal for #Callon. Other deals in the Permian Basin could follow the APA-Callon announcement. Shareholders in other Permian operators had to be impressed by the premium enjoyed by Callon shareholders in the proposed deal with APA. The acquisition bodes well for [small and midcap] E&Ps as it firmly reinstates the need for a premium for the acquisition of stocks with depressed valuations. As an example, a similarly structured deal for Vital Energy which resembles Callon, represented a 45% upside for Vital. The race to lock down Permian acres and future drilling locations touched off with Exxon Mobil Corp.'s October 2023 announcement that it was buying Pioneer Natural Resources, the largest oil producer by volume in the play, for about $60B in an all-stock deal. In the Texas-based M&A wave that began forming then, deals for Permian E&Ps have featured little to no premium for the sellers. #impairment #PPA #409a #businessvaluations #ASC805 #mergers Source: CreditSights; Market Intelligence; Market Data
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The Permian Basin has seen a surge in mergers and acquisitions, exceeding $100 billion in value. Major deals include Exxon's acquisition of Pioneer Natural Resources, Chevron's purchase of Hess Corporation, and Occidental's takeover of CrownRock. The trend of consolidation is expected to continue, with large E&P firms focusing on acquiring assets and resource inventories in the Permian Basin.
Oil’s Mega Acquisition Spree Might Not Be Over Yet | OilPrice.com
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