Political backsliding and “deteriorating relations”…
In its latest report, the…
As Permian Basin buyers line up, Exxon Mobil (XOM) on Tuesday said it would pay up to $US6.6 billion to more than double its acreage in the superstar shale area.
The news comes only a day after Noble Energy (NBL) agreed to buy Clayton Williams Energy (CWEI) for $US2.7 billion to expand its own holdings in the Permian.
Exxon will buy companies owned by the Bass family of Fort Worth, and it will make an upfront payment of US$5.6 billion in stocks.
The acquired companies hold about 275,000 acres of leasehold that produces more than 18,000 net oil equivalent barrels per day in west Texas and New Mexico parts of the Permian Basin, Exxon said. Additional payments of up to US$1 billion will start in 2020, depending on production performance.
This is the biggest deal for Exxon since 2009, when it bought XTO Energy, and the first major deal struck my Chief Executive Darren Woods since he took over for Rex Tillerson, Trump’s pick for U.S. Secretary of State.
Exxon currently produces about 140,000 net oil-equivalent barrels per day across its Permian Basin leasehold of roughly 1.5 million acres.
Exxon spokeswoman Suann Guthrie, an Exxon spokeswoman, told news agencies that the company expected “attractive returns” with oil prices even as low as US$40.
The Permian Basin has become increasingly attractive of late because other large U.S. shale fields are only profitable with oil prices at US$60 per barrel or higher, while oil in the Permian can be produced at current prices of around US$53 per barrel.
Exxon estimates that the new Permian acreage contains some 3.4 billion barrels of recoverable oil in the Permian and can produce about 18,000 barrels of oil equivalent per day, mostly crude, with current technology.
By Damir Kaletovic for Oilprice.com
More Top Reads From Oilprice.com:
Damir Kaletovic is an award-winning investigative journalist, documentary filmmaker and expert on Southeastern Europe whose work appears on behalf of Oilprice.com and several other news…