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Vital Energy Raises Production Outlook and Capital Spending with Significant Permian Basin Acquisition
07/31/2023![Vital-Energy-Raises-Production-Outlook-and-Capital-Spending-with-Significant-Permian-Basin-Acquisition](https://images2.rextag.com/public/blog/166Blog_Vital Energy Closes $362MM Permian Deal Acquired Forge Assets.png)
Vital Energy’s deal adds 24,000 net acres and 100 gross drilling locations in Texas, growing its Permian Basin footprint to around 198,000 net acres.
Vital Energy is revising its projections for oil and gas production and capital spending upward following the successful acquisition of a substantial area in the Permian Basin. The company has gained around 24,000 net acres and 100 gross drilling locations in Texas. As a result of this deal, Vital Energy is now increasing its full-year production and capital spending guidance.
Vital Energy Completes $391.6M Acquisition of Forge Energy II
Tulsa-based Vital Energy finalized its acquisition of Forge Energy II Delaware LLC on June 30, as reported in a July 11 news release. The transaction involved a cash payment of $391.6 million, securing 70% ownership of Forge's assets, with adjustments made for closing price.
In a collaborative effort with Minnesota-based Northern Oil & Gas Inc., Vital Energy obtained Forge's assets through a joint deal. Vital Energy assumed operational control of the acquired assets with a 70% stake, while NOG acquired the remaining 30% for $167.9 million in cash.
This acquisition contributes approximately 24,000 net acres and an additional 100 gross drilling locations situated in Pecos, Reeves, and Ward counties, Texas. With this expansion, Vital Energy's footprint in the Permian Basin now spans around 198,000 net acres.
Oil and gas production outlook
After acquiring Forge and surpassing production projections for the first half of 2023, Vital is raising its oil and gas production outlook.
- Total production is now estimated at 82,000 boe/d to 86,000 boe/d, up from the previous 76,000 boe/d to 80,000 boe/d.
- Crude oil production is expected to rise to 40,000 bbl/d to 43,000 bbl/d from the earlier 36,300 bbl/d to 39,300 bbl/d.
Vital plans to use a single drilling rig and bring five wells online in the recently acquired Delaware Basin acreage to boost production. The company has allocated an additional $50 million in its capital spending budget for these efforts. The revised full-year capital spending forecast is now $675 million to $725 million, highlighting Vital's commitment to expanding its presence and optimizing production in the oil and gas market.
In the latter half of 2023, Vital intends to utilize a single drilling rig and activate five wells on the Delaware Basin acreage acquired from Forge. To support the development of these newly acquired assets, Vital has allocated an additional $50 million in its capital spending budget. Consequently, the company's full-year capital spending forecast has been adjusted to range between $675 million and $725 million, reflecting an increase from the original guidance of $625 million to $675 million.
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Chevron Announces Intent to Divest Oil and Gas Properties in New Mexico and Texas
![$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.
Triple Advantage Vital Energy's $1 Billion M&A Enhances Permian Portfolio, Cash Flow
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/190Blog_Triple Threat Vital Energy's $1B M&A.png)
Vital Energy, focused on the Permian Basin, plans quick debt reduction after securing $1.165 billion in deals, adding key Midland and Delaware basin inventory.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/297_Blog_Keystone XL Pipeline Controversy and Wildlife Disaster From Trump's Green Light to Biden's Red Light on the 15 Billion Project.jpg)
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.