Permian Basin leads more than $50 million in oil and gas mergers so far in 2024

This year got off to a strong start for mergers and acquisitions in the fossil fuel sectors, with the Permian Basin leading the nation’s more than $50 billion in industry business deals during the first quarter of 2024.

A report from Enverus estimated the Permian in West Texas and southeast New Mexico accounted for 60% of Q1 2024 mergers and acquisitions (M&A) so far this year, which could put the U.S. on pace to exceed last year’s overall record of $192 billion in deals.

Enverus expected the momentum would slow during the second quarter as potential targets for consolidation were bought up, making it unlikely, the report read, for another record-breaking year.

Andrew Dittmar, analyst at Enverus said the momentum earlier in the year was driven by companies looking to acquire new acreage already in operation by smaller companies.

“Deals at the start of 2024 were driven by the same factors that led to last year’s marathon of mergers, foremost among them a desire to lock up high-quality inventory when it is available,” he said. “Most of that inventory is going to be found in the Permian, so it is unsurprising the prolific basin was yet again the primary driver for M&A within oil and gas.”

Leading the string of deals so far this year was Endeavor Energy Resources’ $26 billion sale to Diamondback Energy in February, read the report, positioning Diamondback as a leader among Permian-focused exploration and production (E&P) companies. Enverus said the deal gave Diamondback scale in the region “comparable” to that of leader Pioneer Natural Resources, which sold to ExxonMobil last year for $64 billion.

Another leading deal was APA Corporation’s $4.5 billion buyout of Callon Petroleum Company, a transaction completed April 1. Those two deals and several other smaller transactions gave the Permian its 60% share of Q1 2024 M&A, the report read.

Dittmar predicted other large acreage holders in the region like Mewbourne Oil and Fasken Oil & Ranch could be similarly sought by large E&Ps looking to build scale in the booming Permian.

“However, there are no indications these closely held companies are looking to exit any time soon,” Dittmar said. “That leaves public E&Ps looking to scoop up the increasingly thin list of private E&Ps backed by institutional capital and built with a sale in mind — or figuring out ways to merge with each other.”

More: Feds look to uphold oil and gas leases in Carlsbad that lawsuit wants overturned

ExxonMobil signs deal for electric fracking in Permian Basin

A three-year deal will see ProPetro provide electric hydraulic fracturing services to oil giant ExxonMobil for its operations in the Permian Basin, according to a company announcement. ProPetrol will deliver and operate its FORCE electric-power fracking fleets to complete oil and gas wells for Exxon, starting full operations in early 2025.

ProPetro chief executive officer Sam Sledge said the deal will see more “environmentally friendly” operations in the basin.

"This step is a significant moment for us, showcasing our collaboration with a leading global energy provider to deliver innovative, cost-effective, and more environmentally friendly energy service solutions through our multi-year agreement,” Sledge said in a news release. “This commitment, which includes electric hydraulic fracturing, wireline, and pump down services, underlines our dedication to leading the industry with high-quality, low-emission, and industrialized services."

More: APA's $4.5B buy out of Callon Petroleum targets Permian Basin oil and gas assets

Oil prices hold in low $80s range

Domestic oil was trading at about $83 a barrel on Monday morning, according to the Chicago Mercantile Exchange, which predicted the price would stay at more than $80 barrel until November.

The latest price marked several weeks of growth from as the price was $79 a barrel reported March 13, climbing to about $87 a barrel – the highest of the year – and dipping to $82 a barrel by April 17, according to data from Nasdaq.

These were some of the highest oil prices of the year which started at $70 a barrel, records show, steadily climbing to April’s peak.

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on the social media platform X.

This article originally appeared on Carlsbad Current-Argus: Permian Basin oil and gas mergers lead $50 million in deals