• 4 minutes Energy Armageddon
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 10 minutes Wind droughts
  • 18 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 21 hours "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 5 hours "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 1 day "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 2 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 13 hours Uniper is over - Germany (Government) buys the Company
  • 1 day "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 11 hours "How BlackRock Conquered the World" by James Corbett (all 3 parts)
  • 1 day "Oil prices likely not responsible for inflation and other energy insights by hedge fund manager Josh Young" - Kitco News interview by David Lin
  • 1 day The Federal Reserve and Money...Aspects which are not widely known
  • 7 days "Dodgy Demand Data? The Oil Price Collapse Conspiracy" by Alex Kimani
  • 12 days Is Europe heading for winter of discontent with extensive gas shortages?
  • 14 days "Forget Oil, The Real Crisis Is Diesel Inventories: The US Has Just 25 Days Left" by Zero Hedge - 5 Stars *****
How Much Has Harvard’s Fossil Fuel Divestment Cost It?

How Much Has Harvard’s Fossil Fuel Divestment Cost It?

Harvard University made headlines when…

Escalating Protests In China Add To Oil Market Volatility

Escalating Protests In China Add To Oil Market Volatility

Lockdown protests in Guangzhou escalated…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Will The Permian Merger Mania Continue Into 2022?

  • 2021 saw a big number of high-profile oil deals in the prolific Permian basin
  • Independent oil companies are leading the charge
  • The Delaware Basin is especially attracting attention from E&Ps

The Permian shale play, the star of the shale patch, witnessed a hot merger and acquisition year in 2021 amid the pandemic as many companies sought to gain an edge over competitors by either increasing their presence in the play or in the case of Shell, leaving it altogether.

Shell's exit from the Permian cost ConocoPhillips $9.5 billion in cash, boosting its position in the Permian quite considerably at a time when the play continues to be a magnet for an industry no longer committed to production growth at all costs.

Independents are perhaps even more active in dealmaking. Earthstone Energy, a Texas-based oil producer, last month paid some $600 million for assets in the Delaware Basin—one of the most attractive parts of the Permian—with the deal slated to close by the end of March this year. Earthstone said the acquisition would increase its production by 39 percent.

Another Texas-based driller, Abraxas Petroleum Corporation, earlier this month said it had sold all of its assets in North Dakota in order to focus on operations in the Permian. According to the company's chief executive, the move would help Abraxas reduce its debt load and boost returns to shareholders.

Consolidation is also ongoing in the most prolific U.S. shale play. Last month, private equity firm EnCap Investments merged two of its portfolio companies operating in the Permian into a $4-billion company that the owner plans to take public this year. The plan signals continued optimism for the oil sector despite the ESG push and banks' growing reluctance to lend to oil and gas.

The trend is a continuation from last year when consolidation really took off in the Permian amid record-low interest rates, improving oil prices, and a bullish demand outlook for crude. In the second and third quarters of the year alone, deals worth a total of $30 billion took place, including Shell's sale to Conoco. 

According to Evaluate Energy, which publishes quarterly reports on upstream M&A, the second quarter of 2021 saw deals worth $18 billion during the second quarter and $12 billion during the third quarter. The figures for the fourth quarter have yet to come out, but they are likely to have remained robust even though a certain slowdown is likely to have been recorded.

The slowdown was increased regulatory scrutiny on deals amid high gasoline prices that made consumers critical of how the government is handling essential commodities. This growing criticism prompted antitrust authorities to extend the review period for at least five mergers and acquisitions in the oil and gas space during the final quarter of 2021, Reuters reported in December.

The scrutiny is unprecedented, according to a former acting chair of the Federal Trade Commission, who told Reuters that the new chair of the FTC may actually want to deter mergers in the oil and gas industry.

"Even though previous Democratic FTC commissioners wanted active enforcement, the industry was told what the standards were, deals got reviewed and things moved along. This is really different," Maureen Ohlhausen said. "I believe the FTC Chair, effectively, would like to deter mergers."

"I am aware of two mergers in the last couple of months where FTC staff did not see a need to issue a second request but were overruled by their management," said the chair of antitrust practice at law firm Vinson & Ellis, Darren Tucker, as quoted by Reuters.

If this is indeed the case, it may affect the immediate future of dealmaking in the Permian and will likely deepen an already unfriendly sentiment in the industry towards the administration. Whether this increased scrutiny would eventually lead to lower prices at the pump, however, remains an open question.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News