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A New $1.5-Billion Permian Deal Could Be In The Making

Private U.S. oil and gas producer TRP Energy is considering selling its business in the Permian in a deal expected to fetch over $1.5 billion, sources with knowledge of the matter told Reuters on Thursday.

TRP Energy, controlled by Greenbelt Capital Partners, is exploring the sale of around 15,000 net acres in the Midland part in the Permian, as a growing number of private operators have started seeking profitable exits from their operations.  

One investment bank is already advising TRP Energy on a potential sale, which is not certain to happen, according to the anonymous sources who spoke to Reuters. 

“Most public companies are in need of inventory, and the land held by private E&Ps is where they can find it,” Andrew Dittmar, director at Enverus, said last month, discussing the state of the M&A in the U.S. upstream.

The value and volume of U.S. upstream oil and gas deals fell in the first quarter of the year as companies focused on mature plays and are still watching and waiting for opportunities to snap up undeveloped acreage in the Permian.

Record cash flows in the industry and dwindling inventory of prime drilling locations for many smaller producers have set the stage for a new raft of consolidation in the U.S. oil industry. This year, the M&A activity is expected to move into a higher gear as private equity looks for the exit while public companies look for additional top-tier acreage, analysts say. 

In May, Chevron signed a deal to buy shale firm PDC Energy in an all-stock transaction valued at $6.3 billion, or $72 per share. Through the acquisition of PDC Energy, Chevron will gain high-quality assets adjacent to its positions in the Denver-Julesburg (DJ) and the Permian Basins.

And just last week, Colorado-based producer Civitas Resources said it would enter the Permian basin after the signing of two definitive agreements to acquire oil producing assets in the Midland and Delaware Basins of west Texas and New Mexico for $4.7 billion.   

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By Charles Kennedy for Oilprice.com

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