• 5 minutes 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 8 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 12 minutes Will Uncle Sam Step Up and Cut Production
  • 2 hours A legitimate Request: France Wants Progress In Ukraine Before Russia Returns To G7
  • 9 hours Danish Royal Palace ‘Surprised’ By Trump Canceling Trip
  • 10 hours Recession Jitters Are Rising. Is There Reason To Worry?
  • 31 mins Used Thin Film Solar Panels at 15 Cents per Watt
  • 4 hours IS ANOTHER MIDDLE EAST WAR REQUIRED TO BOLSTER THE OIL PRICE
  • 1 hour China has invested btw $30 - $40 Billon in Canadian Oil Sands. Trump should put 10% tariffs on all Chinese oil exported into or thru U.S. in which Chinese companies have invested .
  • 16 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 2 hours Strait Of Hormuz As a Breakpoint: Germany Not Taking Part In U.S. Naval Mission
  • 18 mins US to Drown the World in Oil
  • 16 hours US Shale Economic Impact: GDP gain realized in shale boom’s first 10 years
  • 16 hours TRUMP'S FORMER 'CHRISTIAN LIAISON' SAYS DEEPWATER HORIZON DISASTER WAS GOD'S PUNISHMENT FOR OBAMA ISRAEL DIVISION
  • 15 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 1 hour LA Solar Power/Storage Contract
  • 14 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 1 hour Iran Is Winning Big In The Middle East
Alt Text

Authorities Bust Illegal Crypto-Mining Lab In Nuclear Power Plant

Ukrainian Security Service operatives discovered…

Alt Text

Is China Blocking Vietnam’s Access To $2.5 Trillion In Oil & Gas?

Washington accused China of interfering…

Alt Text

U.S. Sanctions To Halve Venezuela’s Oil Rig Count

A U.S. sanction waiver expiry…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

The Newest Sweet Spots In U.S. Shale

Over the past three years, the Permian has been the focus of both oil analyst and buyers’ attention. Most of the new drilling and asset acquisitions in America took place in the fastest-growing U.S. shale region, thanks to the Permian’s lower breakeven prices compared to other shale plays.

The Permian continues to be a coveted area for buyers, but competition for scooping the best acres has intensified, driving asset prices significantly higher.

Now some independent and smaller players are looking to gain access to assets outside of the Permian because this year’s higher oil prices have made other U.S. shale plays profitable again.

The Permian will continue to be the biggest growth story in U.S. shale until 2027, but companies have started to look for opportunities in other plays to boost production and do deals that add value to their resources, Wood Mackenzie’s Chief Analyst and Chairman Simon Flowers wrote in an analysis published in Forbes.

In the last three years, a third of the world’s upstream spending on mergers and acquisitions (M&A) took place in the U.S. Lower 48. The Permian attracted $2 out of every $3 spent in U.S. shale, WoodMac has estimated.

Yet, over the past few months, more and more deals outside the Permian have been announced. In just one week at the end of October and early November, three takeovers worth a total of US$13.7 billion were focused on assets outside the Permian.

Denbury Resources said it would buy Penn Virginia in a deal that adds Penn Virginia’s assets in the Eagle Ford to Denbury’s portfolio.

Chesapeake Energy said it was buying WildHorse Resource Development, whose operations are in the Eagle Ford and Austin Chalk formations in southeast Texas.

Encana Corporation said it would acquire Newfield Exploration Company, adding 360,000 net acres of premium assets in the STACK/SCOOP. Related: Another Nuclear Megaproject Bites The Dust

These non-Permian transactions show that buyers are looking to add value in other U.S. plays. There are five key reasons for those three deals, according to Greig Aitken, head of M&A Analysis, and Robert Clarke, Director, U.S. Lower 48 Research, at Wood Mackenzie.

First, with higher oil prices this year, areas other than the Permian are back in the money, such as the Eagle Ford and STACK/SCOOP.

Then, market access is currently easier from the Eagle Ford to the Gulf Coast than it is from Midland, Texas, which is 400 miles away and doesn’t have enough pipeline capacity to carry all the oil to the coast.

The third reason for the deals is the buyers’ goal to diversify assets, according to WoodMac. Encana gets access to STACK/SCOOP with the Newfield deal, adding it to its resources in the Permian and the Montney plays. Denbury buys into the Eagle Ford for more diverse drilling opportunities and can use its enhanced oil recovery (EOR) experience into the play in the long term. Chesapeake’s acquisition of WildHorse adds higher risk growth acreage to its mature Eagle Ford assets.          

The fourth reason for the deals is that while the Permian is increasingly becoming the playground of Big Oil and larger companies, assets in the Eagle Ford, Bakken, or STACK/SCOOP—while more challenging for achieving economies of scale—could add growth potential for some smaller and independent firms.

Finally, there’s value, WoodMac’s analysts say. The Permian’s value may be in a whole different league compared to other plays, but it has become too expensive for smaller players with the dramatic asset inflation, which is absent in other shale areas.

Yet, the recent deals outside the Permian don’t mean that the star U.S. shale play is fading away. They mean that the Permian is currently not the only area in the U.S. shale patch where buyers can add value to their asset positions, according to Wood Mackenzie.

“Permania’s not over. It’s still the hottest growth play on the planet, with production set to jump by at least 2 million barrels per day through 2027 more than double the rate of the other tight oil plays combined,” WoodMac says.

 By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment
  • Dan on November 20 2018 said:
    Add in the price they are getting for Permian oil compared to higher Gulf Coast price, the higher costs of Permian as sweet spots are already drilled, Chesapeake also picked up a fracking sand operation that according to Bloomberg any sand operation is worth billions and the Eagle Ford looks monetarily positive.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play