- The Permian Basin should be ripe for consolidation, industry experts say, but companies are steering clear of big ticket M&A in the Permian, as the lack of infrastructure for handling the play's production boom has made investors bearish on Permian stocks this year and made dealmaking more difficult, as volatility makes buyers and sellers skittish.
- "Permian bottlenecks do exist and are impacting wellhead pricing and drilling economics in the short term, but in our view this will get worked out over the next 18 months through large capital projects," says Jason DeLorenzo of energy-focused P-E firm EnCap Investments.
- The "industrial logic" of partnering up to get bigger and more efficient should eventually spur consolidation in the Permian, particularly among smaller companies, says Jefferies' Ralph Eads.
- Another positive sign for Permian dealmaking is that at least one large explorer - BP - may be getting ready to make a big bet there, reportedly emerging as the front-runner for BHP Billiton’s onshore operations in the U.S., which includes a sizable Permian position.
- Permian producers include EOG, PXD, LPI, FANG, SN, COG, CRZO, CXO, RSPP, DVN, NFX, OXY, CVX, XOM, NBL, APC, APA, WPX, CDEV, REN, EGN, JAG, AXAS, HK, MCF, XEC, PE, SM, MTDR, QEP, AR
- Now read: Newfield Exploration: Big Upside Amidst Hedging Profile Distractions
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