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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

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Is Papa Too Late To The Permian Party?

Veteran oil industry executive Mark Papa is back in the game and heading to the hottest shale play – the Permian – but he may be a little late to the party and find the room crowded with players both small and big that have been rushing to secure deals in the area.

Centennial Resource Development (NASDAQ:CDEV), at which Papa is chief executive, now has 77,000 acres in the Permian and plans to increase production to more than 50,000 bpd in 2020 from around 10,000 bpd currently, Papa tells Forbes’ Christopher Helman in an interview published on Thursday.

Papa – the former CEO of EOG Resources between 1999 and 2013 – has secured Permian acreage via recent deals of companies he was invested in. First, Silver Run Acquisition – a company Papa set up with Riverstone founders Pierre Lapeyre and David Leuschen – bought a controlling stake in Centennial Resource Production in July 2016. At the finalization of the transaction, Silver Run was renamed Centennial Resource Development. At the time the acquisition was announced, Centennial had 42,500 net acres primarily in Reeves and Ward counties and around 7,200 boed of net production.

 

Then, in November last year, Centennial said it would buy 100 percent of the leasehold interests and related upstream assets in Reeves County from Silverback Exploration. This added around 35,000 net acres in Reeves County and around 3,500 boed of net production to Centennial’s assets.

Speaking to Forbes, Papa said:

“If we did anything wrong in my time at EOG it was underestimating the power of the Permian.” Related: Nigeria Rescues Oil Tanker From High-Seas Pirates

The Permian has been a prime target for companies and drillers. Last month Exxon doubled its acreage and Noble Energy acquired Clayton Williams Energy in a bid to expand its footprint in the shale play.

And the action continues in the Permian, as this week, Austin-based Parsley Energy announced a $2.8 billion deal with Double Eagle Energy Permian LLC, giving it access to underdeveloped acreage and already producing oil & gas properties. Parsley’s total Permian acreage now equals 227,000 acres.

And although it is starting to look like the shale play may be a bit crowded, Permian output is expected only to rise. In addition, Papa believes oil demand will continue to increase, and that U.S. shale is best positioned in terms of flexibility to fill the gap that deepwater will leave because investments are sharply down while deepwater projects need years of lead time.

By Tsvetana Paraskova for Oilprice.com

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