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A major U.S. shale oil producer is looking to start a land selloff in the lone star state
10/05/2021
Pioneer Natural Resources Co PXD.N, one of the nation's largest oil companies by output, has put up for sale its onshore assets in the Delaware basin of Texas intending to raise over $2 billion.
This move comes to light following crude oil prices rebound after last year's pandemic-induced crash. Gas and oil are hiking to new heights as the demand for exports is rising. The price of West Texas Intermediate Crude is now at about $70 per barrel. As a result of the recovery, producers are finally able to shed some underperforming properties, igniting a shale consolidation wave.
In the event of a successful sale, Pioneer would be left concentrating on the Midland Permian, its traditional base of operation.
Through divestment, Pioneer likely wants to streamline its upstream portfolio. Since at present, investors are pressing more and more upstream companies for a higher shareholder value, not production, so they are forced to focus on finding profitable resources instead.
The need for Pioneer to restructure its business and reduce debt is understandable, giving a big splurge earlier this year when it completed two acquisitions valued at over $1 billion each. The oilfield services business was already sold by Pioneer for an undisclosed sum in March to kickstart the process. As speculated, the company has agreed to sell approximately 20,000 net acres in western Glasscock County, Texas, to Laredo Petroleum for as much as $230 million under its assets sale plan.
Pioneer paid $6.2 billion for Midland-basin rival DoublePoint Energy after closing the Parsley deal in January. As a result of the deals, companies’ total debt amounted to no less than $6.9 billion at the end of June, spiking more than 100% up from $3.1 billion six months prior.
With this convenient acquisition, the company now owns 97,000 acres in the Permian Basin, making it one of the biggest producers there. Through the transaction, the acquirer now controls approximately 1 million acres of basin land.
Apart from offsetting its debt, Pioneer also recently pushed forward with the notion of paying a variable quarterly dividend starting in September instead of the first quarter of 2022 as was planned earlier. Not surprising, considering boosted buybacks and dividends are part of the wider effort of shale companies to improve investor confidence following years of sub-par returns compared to other industries.
Therefore a detailed analysis of such intel becomes a useful necessity for any financial endeavor. The map-based asset intelligence provided by Rextag, as shown, allows business development teams to rapidly and accurately analyze and grab all and any opportunities such as Pioneer's proposed sale from a holistic standpoint, including midstream.
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Restructuration is in a full-speed: Comstock to sell Bakken for $154 million
Comstock Resources decided to go through with asset divestment, selling its Bakken Shale actives for $150M to Northern Oil and Gas. The proceeds from these sales will be reinvested by Comstock Resources Inc. into the Haynesville Shale, at which point the company may acquire additional leasehold and fund drilling activities starting in 2022. Meanwhile, Northern clearly gunning for the pack leading position in the Texas shale play, but whether they succeed or not is remains to be seen.
Kimbell Set to Purchase Permian and Mid-Continent Assets for $455 Million
Kimbell Royalty Partners' acquisition adds land in Delaware & Midland basins, enhancing its lead in production, active rigs, DUCs, permits & undrilled inventory. Kimbell Royalty Partners LP has recently announced a landmark deal, the largest in its history, to expand its foothold in the oil and gas industry. The company has agreed to purchase Permian Basin and Midcontinent assets for a staggering $455 million in cash from a private seller.
The Williston Basin is a big area filled with layers of rock that sits next to the Rocky Mountains in western North Dakota, eastern Montana, and the southern part of Saskatchewan in Canada. This area covers roughly 110,000 square miles. Geologically, it's very similar to the Alberta Basin in Canada. People started drilling for oil in the Williston Basin back in 1936, and by 1954, most of the land where oil could likely be found was already claimed for drilling. The Bakken Formation with parts of Montana, North Dakota, Saskatchewan, and Manitoba has become one of only ten oil fields globally to yield over 1 million barrels per day (bpd) since the late 2000s. It is currently the third-largest U.S. shale oilfield, behind the Permian and Eagle Ford. The boom in the Bakken started around September 2008, coinciding with the U.S. housing market crash. The application of new technologies, such as swell packers enabling multiple-stage fracturing, significantly enhanced oil recovery, making the Bakken Formation a key player in the U.S. In 2022, the Bakken oil field saw big improvements in how much oil and gas it could produce. At the start of the year, 27 drilling rigs were working there, more than double the 11 rigs from the start of 2021. Important upgrades included making the Tioga Gas Plant able to process 150 million cubic feet more gas each day, and making the Dakota Access Pipeline bigger, increasing its oil transport capacity from 570,000 to 750,000 barrels every day.
Continental Resources is expanding its operations in the Midland Basin, including taking over some assets that used to belong to Occidental Petroleum. The company plans to use its expertise in exploration in this area.
Equinor and EQT Corporation have agreed that Equinor will exchange its operated assets in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated interests in the Northern Marcellus formation.