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As merger-mania in the American shale patch continues to gain momentum, ConocoPhillips is now said to be considering an offer for Permian basin producer CrownRock LP, Reuters reports, citing unnamed sources.
Privately-held CrownRock is valued between $10 billion and $15 billion, according to Reuters sources, and ConocoPhillips has expressed interest in the sale, as have a host of other producers, including Marathon Oil, Devon Energy, Continental Resources and Diamondback Energy. None of the companies mentioned has confirmed the Reuters report, though Bloomberg likewise reported earlier this month that Devon has expressed interest in CrownRock.
Citing unnamed sources, Bloomberg said on October 18 that Devon had held preliminary talks about a potential tie-up with Marathon Oil Corp in a deal with CrownRock.
Reports first emerged in September that CrownRock was exploring a sale.
CrownRock is backed by a private-equity group led by Texas billionaire Timothy Dunn and owns and operates attractive plays in the Permian basin, with 86,000 net acres in the Permian’s Midland basin.
A deal for CrownRock would be the third new deal to accentuate the consolidation of the American shale patch.
Earlier this week, Chevron announced it would acquire Hess Corporation in an all-stock transaction valued at $53 billion, giving Chevron exposure to offshore Guyana’s oil bounty. Earlier this month, ExxonMobil announced a deal to buy Pioneer Natural Resources in an all-stock transaction valued at $59.5 billion. The implied total enterprise value of the transaction, including net debt, is around $64.5 billion. One of the primary drivers leading bigger shale producers to step up their merger and acquisition activity this year is the need to make new discoveries to replace rising production, David Messler wrote for Oilprice.com.
“Shrewd operators have used their cash flow to fund aggressive acquisition campaigns that have enhanced their reserve replacement rates,” Messler said.
By Tom Kool for Oilprice.com
Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations