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Civitas Makes $4.7B Entry into Permian Basin
07/24/2023![Civitas-Makes-4-7B-Entry-into-Permian-Basin](https://images2.rextag.com/public/blog/163Blog_Hibernia and Tap Rock Combine Forces Across Texas and New Mexico.png)
Civitas Resources Expands into Denver-Julesburg Basin through $4.7B Cash and Stock Deals for NGP's Tap Rock and Hibernia.
Civitas Resources has recently secured two definitive agreements to expand its presence in the Permian Basin's Midland and Delaware basins. The company will achieve this expansion through the acquisition of two private exploration and production companies, namely Hibernia Energy III LLC and Tap Rock Resources LLC. The total value of the deal, paid in both cash and stock, amounts to $4.7 billion. Both Hibernia Energy III LLC and Tap Rock Resources LLC are supported by NGP Energy Capital Management LLC. These acquisitions reflect the increasing demand for oil and gas reserves in the Permian Basin, with companies specializing in the region actively seeking new opportunities. Currently, Civitas Resources' primary production operations are focused in the Denver-Julesburg Basin (D-J Basin).
"These accretive and transformative transactions will immediately create a stronger, more balanced and sustainable Civitas," Chris Doyle, Civitas president and CEO.
Scale and Reserves
- Civitas has gained immediate scale by acquiring 68,000 net acres in the Permian Basin, with 90% of these acres held by production (HBP).
- The acquired assets come with proved reserves totaling approximately 335 million barrels of oil equivalent (MMboe) as of the end of 2022.
Increased Production Base
- The acquisitions will result in a substantial increase in Civitas's existing production base, adding 100,000 barrels of oil equivalent per day (boe/d).
- This represents a 60% increase in Civitas's production, with 54% of the increase being oil production.
- Civitas anticipates that its production will average 105,000 boe/d from the time the deals close until the end of 2023.
Acquisition of Tap Rock's Delaware Basin Assets
- In the Delaware Basin, Civitas has agreed to purchase a portion of Tap Rock Resources LLC's assets for $2.45 billion.
- The deal includes $1.5 billion in cash and approximately 13.5 million shares of Civitas common stock valued at around $950 million.
- Tap Rock will retain ownership of the Olympus development area.
Delaware Basin Assets Details
- The acquired assets comprise approximately 30,000 net acres primarily located in Eddy and Lea counties, New Mexico.
- These acres are considered core Delaware acreage, an area known for its oil and gas potential.
- Tap Rock's production from these assets averaged around 59,000 boe/d in the first quarter, with 52% of it being oil production.
- Civitas also gains access to an inventory of approximately 350 drilling locations, providing valuable opportunities for future development.
Civitas is set to acquire Hibernia Energy III LLC's assets in the Midland Basin for $2.25 billion in cash, covering approximately 38,000 net acres in Upton and Reagan counties, Texas. These assets offer significant potential in the active and well-established region. The acquired assets averaged production of 41,000 boe/d in Q1 2023, with 56% being oil.
This expansion will give Civitas access to 450 drilling locations in the Midland Basin. With the acquisition of Hibernia Energy III LLC and Tap Rock Resources LLC, both managed by NGP Energy Capital Management LLC, Civitas aims to become a stronger, more diversified, and sustainable enterprise. This move establishes Civitas with two production centers: one in the Permian Basin, strengthened by the Midland and Delaware Basin acquisitions, and another in the Denver-Julesburg Basin (D-J Basin).
"By acquiring attractively priced, scaled assets in the heart of the Permian Basin, we advance our strategic pillars through increased free cash flow and enhanced shareholder returns. We will soon have nearly a decade of price-resilient, high-return drilling inventory," said Chris Doyle, Civitas president and CEO.
Civitas has stated that these deals will contribute a total of 800 gross locations. As a result, the company's pro forma oil-weighting is anticipated to increase significantly, approaching 50%. Civitas also expects to generate approximately $1.1 billion from these transactions. The company announced two private placements for a senior unsecured debt amounting to $2.7 billion.
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Chevron Announces Intent to Divest Oil and Gas Properties in New Mexico and Texas
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/162Blog_Chevron Announces Intent to Divest Oil and Gas Properties in New Mexico and Texas1.png)
According to Reuters, Chevron has recently made additional assets available for acquisition in both New Mexico and Texas. As part of its strategy to streamline operations following significant shale acquisitions, Chevron is reportedly offering multiple oil and gas properties for sale in New Mexico and Texas. Marketing documents reviewed by Reuters reveal the company's intention to divest these assets. Despite its prominent position as the largest publicly-traded oil and gas producer and property owner with 2.2 million acres in the Permian Basin of West Texas and New Mexico, Chevron has been actively divesting properties in the region. This divestment aligns with Chevron's efforts to optimize its portfolio and focus on its core operations.
Breaking Barriers FireBird II, Empowered by Quantum Technology, Surpasses $500MM Funding Milestone for Permian Ventures
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/147Blog_FireBird Energy Permian Basin assets.png)
Following the success of FireBird Energy's $1.75 billion sale to Diamondback last year, the emergence of FireBird II signals a new chapter in the Permian Basin. Get ready for some exciting news from the energy industry. FireBird Energy II, the new player in the Permian Basin, has just secured $500 million in equity funding to fuel their acquisitions. With backing from the esteemed private equity firm Quantum Energy Partners, FireBird Energy II is poised to make waves in the industry.
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The pipeline industry in the USA faced and still faces a range of regulatory challenges, including permitting delays, environmental requirements, and public opposition to pipeline projects. In recent years, pipeline projects like the Keystone XL and Dakota Access pipelines had legal and regulatory obstacles that delayed or canceled their construction. Keystone XL Pipeline, proposed by TransCanada in 2008, aimed to transport crude oil from Canada (around Calgary and Edmonton) to refineries on the Gulf Coast (Port Arthur). The project faced opposition from environmental groups and indigenous communities, who argued that it would contribute to climate change and pose a risk to water resources. In 2015, President Obama rejected the project, citing concerns about its environmental impact. However, in 2017, President Trump revived the project, leading to further legal challenges. In June 2021, U.S. President Joe Biden officially canceled the project on his first day in office.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/282_Blog_Renewable Natural Gas How RNG Changes the Industry.jpg)
The renewable natural gas (RNG) industry in the United States is showing promising signs of growth. As of 2019, the U.S. consumed 261 billion cubic feet (BCF) of RNG, primarily utilized by independent power producers, electric utilities, and various commercial and industrial entities. However, this figure represents only a small fraction of its potential. Research indicates that the U.S. could theoretically produce up to 2,200 BCF of RNG through anaerobic digestion alone, which would equate to about 11% of daily national natural gas consumption.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/295_Blog_Renewable Efforts Lag as Global Oil and Gas Demand Continues to Rise.jpg)
Recently, the progress toward an energy transition is hitting a snag. Sales of electric vehicles are decelerating, and the growth in wind and solar power needs to be keeping pace with expectations. To make matters more challenging, electricity prices are climbing when they were expected to fall. Amidst these setbacks, the oil and gas sectors are proving resilient. According to BP's latest energy outlook, not only are these energy mainstays here to stay, but their demand is expected to remain relatively high even after reaching a peak. Interestingly, BP forecasts that oil demand will reach its zenith next year, marking a critical moment in energy consumption trends. This isn't the first time BP has projected a peak in oil demand. Back in 2019, their review anticipated a decline in demand growth, but the prediction fell flat. Instead, oil demand surged to unprecedented levels following the end of the global pandemic lockdowns, defying previous forecasts and underscoring the enduring dominance of traditional energy sources in the global market.