Tag Archive for: drilling

Matador Resources Company has announced the acquisition of Permian Basin oil and gas properties from Ameredev II Parent, LLC for $1.9B.

Deals, Mergers & Acquisitions

Matador Resources Company has announced the acquisition of Permian Basin oil and gas properties from Ameredev II Parent, LLC for $1.9 billion. This deal includes a 19% stake in Piñon Midstream and enhances Matador’s existing portfolio with high-quality assets in Lea County, New Mexico, and Loving and Winkler Counties, Texas. With this acquisition, Matador’s Delaware basin acreage will exceed 190,000 net acres, producing over 180,000 boed with proved reserves surpassing 580 MMboe. The acquisition is strategically important for Matador, boosting its asset base, production capabilities, and free cash flow potential. This acquisition by Matador Resources strengthens its foothold in the prolific Permian basin, particularly the Delaware sub-basin, known for its high production rates and substantial reserves. The addition of 33,500 net acres and 431 operated drilling locations enhances Matador’s operational scale and future drilling inventory. The increased production capacity and proved reserves underscore Matador’s growth trajectory and market valuation, now projected to exceed $10 billion.

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Source: Oil Price

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The EIA said on Monday that American shale output from the top-producing regions would soar to a six-month high in June.

The U.S. oil output hit an all-time high in the final two months of 2023. It is with year-over-year growth clocking in at over 1 million barrels per day. This is what the Energy Information Administration (EIA) said on Monday. Basically, the American shale output from the top-producing regions would soar to a six-month high in June.

This was during the monthly Drilling Productivity Report released on Monday. the EIA said production in the top basins in the American shale. Its patch would hit 9.85 million barrels per day–a volume not seen since December.

Shale output accounting for some 75% of total U.S. oil production and well productivity. It improved by the day, output has a clear path for increasing.

According to the EIA, the production per new drilling rig in the Permian basin should hit 1,400 bpd in June, compared to 1,386 in May, which also represents the highest monthly output per single rig since late 2021. Overall, output in the Permian Basin is expected to rise to 6.19 million bpd for a total rise of nearly 18,000 bpd. By comparison, Eagle Ford output in Texas is poised to reach 1.11 million bpd–a record since last December, while output in the Bakken will increase just barely.

In December last year, U.S. crude oil production rose from 11 million bpd in July to 13.3 million bpd. This is as producers took advantage of higher oil prices coming off a pandemic.

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Source: Oil & Gas 360

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Enverus reports this week that oil & gas upstream mergers and acquisitions reached a new 1st quarter high over the initial 3 months of 2024.

Big energy analytics and advisory firm Enverus reports this week. That oil and gas upstream mergers and acquisitions reached a new first quarter high. Over the initial three months of 2024. In a release sent out Tuesday, report author Andrew Dittmar. Principal Analyst at Enverus Intelligence Research (EIR), says M&A activity for Q1 2024 totaled to more than $51 billion in deal value.

In an interview, Dittmar says the action started right after the holidays. “We woke up on January 4 to the news that Apache Corp. was doing a $4.5 billion deal to acquire Callon Energy,” he says. “We knew Callon had been on the block, so that wasn’t surprising. Although it was a little surprising. Apache was the acquiring company, just since they haven’t been all that active in the space.”

The record first quarter comes on the heels of the 21st century-high deal total of $192 billion for 2023. Although the Q1 total deal value of $51 billion maintains the pace set last year. Dittmar says he doesn’t expect it to continue for much longer. “The remaining inventory for potential deals remains in the Permian Basin.” He points out, adding, “and the Permian is increasingly controlled by ExxonMobil, ConocoPhillips, Diamondback Energy, Chevron, and Occidental.”

All of those companies have executed major Permian-heavy deals in recent years. And Dittmar says they are now content to own as big a position in the most active basin in the country as they can.

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Source: Forbes

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Macquarie models U.S. production exiting 2025 at about 14.5 MMbpd, despite expectations for significantly lower crude prices.

U.S. oil production is set to end the year at a record pace of about 14 MMbpd as falling costs and better drilling efficiency overshadow low growth plans from publicly note down companies, Macquarie Group Ltd. analysts said in a note.

Macquarie be on one’s feet out among analysts last year with its projection of surge U.S. shale production and ultimately show to be true or correct. Its latest forecast comes as shale-oil operators are vowing to rein in production growth for a fourth straight year and consolidation in the industry presents headwinds to further growth. The U.S. government expects production to edge up to 13.2 MMbpd this year.

According to Macquarie’s projections, U.S. production is expect to reach approximately 14.5 million barrels per day by the year 2025. This forecast holds true even in the face of expectations for notably reduced crude prices. The modeling conducted by Macquarie suggests that despite the challenging market conditions and potential price fluctuations, the United States will continue to maintain a robust level of oil production in the coming years.

The prediction of U.S. production levels remaining steady at 14.5 million barrels per day by 2025 serves as a testament to the resilience and adaptability of the domestic oil industry. Despite the volatile nature of the market and the potential for lower prices impacting production, Macquarie’s analysis indicates a strong outlook for oil output in the United States. This projection not only underscores the nation’s significant role in the global oil market but also highlights the strategic planning and operational efficiency of U.S. oil producers in navigating challenging economic conditions.

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Source: Oil & Gas 360

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US Oil Rig Count Rises: The oil rig count was 510 in the week ended Mar 15, increasing from the week-ago figure of 504.

In its weekly release, Baker Hughes Company BKR stated that the U.S. Permian oil rig count was higher than the prior week’s figure. The rotary rig count, issued by BKR, is usually bring out in major newspapers and trade publications.

Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the week-ago figure indicates the demand trajectory for the company’s oilfield services from exploration and production companies.

Rig Count Data in Detail

Total U.S. Rig Count Rises: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 629 in the week ended Mar 15. The figure is higher than theweek-ago count of 622. Although the figure increased in three of the prior five weeks, there has been a slowdown in drilling activities. Many analysts believe that shale producers are getting more efficient, requiring fewer rigs, while some doubt whether certain producers have enough prospective land to drill. The current national rig count is, however, lower than the year-ago level of 754.

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Source: yahoo!finance

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2 US oil & gas companies will merge in a $26bn deal, the latest in a wave of acquisitions designed to buy up the best land for drilling.

Two American oil and gas companies have said they will merge in a $26bn (£21bn) deal. The latest in a wave of acquisitions designed to buy up the best land for drilling.

Diamondback Energy has agreed to buy Endeavor Energy Resources in a takeover. That will create a company with a value of about $50bn (£40bn).

The surge in merger activity within the energy sector has been largely fueled by the rise in oil prices following Russia’s invasion of Ukraine in 2022. The escalating tensions and subsequent economic uncertainties have prompted companies to capitalize on their increased profits by expanding their operations and boosting output.

In an effort to maintain their competitive edge and capitalize on the current market conditions, energy companies are looking to consolidate their resources through mergers and acquisitions.

Despite the short-term economic benefits of increased production, experts warn of the long-term consequences of further fossil fuel development.

The International Energy Agency (IEA) has cautioned. That continued investment in new fossil fuel projects could exacerbate global warming beyond safe limits. As the world grapples with the urgent need to transition to cleaner sources of energy. The pursuit of short-term gains through increased oil production may compromise efforts to mitigate the impacts of climate change.

The current merger frenzy within the energy sector underscores the complex trade-offs between economic growth and environmental sustainability.

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Source: The Guardian

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Production in Utah's oil-rich Uinta Basin is at an all-time high. Texas oilman Jim Finley is credited with opening the floodgates.

A Bit Of A Ghost

The Utah’s oil boom: Jim Finley is a bit of a ghost. Outside of oil industry circles, few people have probably ever heard of the man. He rarely speaks in public.

Utah's oil boom

One exception was in October 2021. When Finley the CEO of Texas-based Finley Resources. Presented to a coalition of seven oil-producing counties in eastern Utah. Following his speech, coalition board members and staff applauded Finley for his investments in Utah’s oil-rich Uinta Basin, and thanked him for making time to speak. One person noted that he is a particularly difficult man to get hold of.

“Sometimes nobody knows where I am,” Finley said.

“On purpose,” someone else chimed in. Finley chuckled.

A Key Role

The Texas oilman has played a key role. In spearheading the kind of oil boom that has long evaded the remote basin. In just over a decade, he’s become one of the top producers in the Uinta. And is now playing an outsize role in shaping Utah’s energy future.

Finley has thrown his support behind a controversial rail line that would make it easier for him and the basin’s five other producers to export oil to out-of-state markets, while simultaneously boosting export capacity via trucking and existing rail. He has his fingers in every aspect of basin production, from drilling oil and mining sand for hydraulic fracturing to operating a transloading facility and a growing fleet of oil trains. Powerful political allies have helped him expand his empire, primarily by funneling public money toward infrastructure projects that benefit the oil sector.

Chris Kuveke, a researcher at BailoutWatch, a watchdog group that provided HuffPost with extensive research on Finley’s portfolio and operations, called Finley “the mastermind” of the basin’s current oil boom.

“He has a long history of using campaign finance and lobbying as influence to get his projects where he wants them to be,” Kuveke said. “And he knows what he’s doing. He has a serious track record of influencing the industry that he wants to grow, being a linchpin. And that’s what he’s doing in the Uinta.”

 

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Source: HUFFPOST

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Merger and acquisition activity among exploration and production companies hit $144B in the fourth quarter alone and $190B for 2023.
  • The oil and gas industry is undergoing its biggest-ever consolidation, according to Enverus.
  • Upstream merger and acquisition activity hit $144 billion in the fourth quarter alone. And $190 billion for 2023, both setting records.
  • Bids from Exxon Mobil, Chevron, and Occidental Petroleum were among the key deals fueling the record.

The upstream oil and gas sector is consolidating at a record pace. As companies race to secure longevity in the market.

Merger and acquisition activity among exploration and production companies hit $144 billion in the fourth quarter alone. And $190 billion for 2023, both setting records, according to analytics firm Enverus.

“Oil and gas is undergoing a historic consolidation wave comparable to what occurred in the late 1990s and early 2000s giving rise to the modern supermajors.” Senior Vice President Andrew Dittmar said in a press release. “After a decade of lowered investment in exploration and with the major US shale plays largely defined, M&A has become the preferred tool to replace declining reserves and secure longevity in these companies’ profitable upstream businesses.”

In the fourth quarter, bids from Exxon Mobil, Chevron, and Occidental Petroleum. Were among the key deals fueling the record-setting consolidation.

M&A activity was overwhelmingly focused on oil last year. Totaling $186 billion in deals, while $6 billion targeted gas, according to Enverus.

Interest in the latter will likely grow as the US industry is working on increasing its liquefied natural gas exports over the next three years.

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Source: yahoo!finance

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Last year was big for Texas oil companies as they jockeyed for access to petroleum-rich plots of the Permian Basin and branched into new territories.

The Spree of Oil and Gas Topic. Last year was big for Texas oil companies as they jockeyed for access to petroleum-rich plots of the Permian Basin and branched into new territories.

Recent megadeals struck by Chevron and Exxon put pressure on others in the oil industry to catch the consolidation wave, potentially kicking off a new round of mergers and acquisitions that could have a profound impact on Houston for years to come. Additionally, milestone acquisitions made by Exxon and Occidental Petroleum in the carbon capture space also set the stage for Houston to be ground zero for the growing industry.

Exxon to buy Pioneer for $59.5 billion

Exxon said in October that it would buy Irving-based Pioneer Natural Resources for $59.5 billion in the oil giant’s largest deal since it merged with Mobil more than two decades ago. Expected to be settle in 2024, the deal would make Spring-based Exxon the largest operator in the Permian Basin of Texas and New Mexico and bring the company’s daily production to almost 4.5 million barrels of oil equivalent a day — 50% more than the next largest supermajor.

Source: Houston Chronicle

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Dive into the world of Overriding Royalty Interests (ORRIs) with our comprehensive guide. Explore the advantages, risks, and key considerations for investors eyeing the lucrative energy wealth, especially in regions like Texas.
DISCLAIMER: We are not financial advisors. The content on this website is for educational purposes only and merely cites our own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won’t experience any loss when investing. Always remember to make smart decisions and do your own research!
The world of investments is vast, with opportunities spanning various industries. One lesser-known yet lucrative option for investors is putting money into Overriding Royalty Interests (ORRIs), particularly in regions with a robust history of energy production like Texas. In this comprehensive guide, we’ll delve into the intricacies of investing in ORRIs, exploring what they are, how they work, the potential advantages and risks, and crucial considerations for those eyeing a slice of the energy wealth.

Understanding Overriding Royalty Interests

Before delving into the investment potential, let’s establish a solid understanding of what Overriding Royalty Interests entail. An ORRI is essentially a share of the revenue generated from the extraction and production of minerals, such as oil and natural gas, from a specific piece of land. Unlike traditional royalties, ORRIs “override” the rights of the working interest owner, entitling the holder to a portion of the income generated, irrespective of property ownership.

Typically expressed as a percentage (e.g., 1% or 3%), the ORRI is calculated based on the gross proceeds from the sale of extracted minerals. This interest is often granted to individuals or entities other than the property owner, such as geologists, drilling companies, or industry professionals.

Mechanics of Overriding Royalty Interests

To grasp how ORRIs function, consider a scenario in the oil-rich landscapes of Texas:

  • A landowner leases their land to an oil and gas company for drilling and extraction.
  • The lease agreement outlines terms, including royalty rates shared between the landowner (lessor) and the company (lessee).
  • Suppose the landowner and company settle on a 20% royalty rate, meaning the landowner gets 20% of mineral revenue.
  • Now, assume an investor holds an overriding royalty interest of 3% on this property. This entitles them to 3% of the gross revenue, in addition to the landowner’s 20% royalty.
  • The remaining 77% of the revenue goes to the drilling company as the working interest.

Investors with ORRIs benefit from mineral extraction without dealing with operational costs or day-to-day activities, making it an enticing prospect for those seeking passive income.

Advantages of Overriding Royalty Interests

Investing in ORRIs offers several advantages for individuals looking to diversify their portfolios:

Passive Income Stream: ORRI holders enjoy a steady income stream without actively participating in operations, making it an attractive source of passive income.

Minimal Operational Responsibilities: Investors are not burdened with operational activities, expenses, or risks associated with drilling and production, minimizing involvement and risk exposure.

Potential for Profit: Regions like Texas, with a history of successful oil and gas production, offer potential for significant profits, attracting investors to the energy sector.

Challenges and Risks

While ORRIs present enticing advantages, investors should be aware of potential challenges and risks:

Market Volatility: The oil and gas industry is prone to price volatility, impacting ORRI profitability and income generation due to fluctuating energy prices.

Lease Terms and Royalty Rates: Unfavorable lease terms or royalty rates negotiated between the landowner and drilling company may reduce potential income for ORRI investors.

Environmental and Regulatory Concerns: Compliance with complex and evolving regulatory frameworks at federal, state, and local levels, along with addressing environmental concerns, poses challenges for ORRI owners.

Key Considerations for Investors

For those eyeing ORRIs as an investment opportunity, careful consideration is paramount:

Lease Negotiations: Thoroughly review and negotiate lease agreements to ensure favorable terms, royalty rates, and protection of investor interests. Professional guidance is invaluable in this process.

Legal and Tax Implications: Navigate the complex legal and tax aspects associated with ORRI ownership by seeking professional guidance. Understand the unique implications and potential tax benefits.

Due Diligence: Conduct comprehensive due diligence before investing. Evaluate profitability potential, stability of the drilling company, and environmental and regulatory factors impacting the investment.

ORRIs vs. Working Interests: Distinguish between overriding royalty interests (ORRIs) and working interests (WIs). While ORRIs offer passive income, WIs involve active participation in operations, bearing operational costs and risks.

 

Investing in Overriding Royalty Interests proves to be a compelling option for those seeking a slice of the lucrative energy sector. While it offers passive income and profit potential, investors must navigate market volatility, lease terms, and regulatory complexities. With careful consideration, thorough due diligence, and professional guidance, investors can unlock the wealth potential of ORRIs and contribute to the dynamic landscape of the energy industry.

 

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