This depositional and sedimentary region of Texas and New Mexico has been hot on the ticker for energy exchange in stock market action of recent months. Invested players in the Delaware Basin will recognize the stacked pay benefits that this area produces with its spread of robust oil-in-place deposits. Chevron and ExxonMobil have been recent operators to step up land and rig acquisition in these ongoing M&A deals in the Delaware Basin, with Exxon just this month making a move for a 16% bump in spending.
Barometers of the oil and gas climate will mark these current trends as predictably ripe for this activity. January 2017 saw BOE prices nearly double what they were the year previous in January 2016, and are bringing in this year at $52 a barrel. Market activity is reflecting that percentage increase as well, at just over a 40% increase.
One of 2016’s most notable M&A deals, of course, was Sunoco Logistics Partners purchase of Energy Transfer Partners, who may be recalled as the main backer of the controversial Dakota Access Pipeline. Energy Transfer Equity, the controlling general partner, would appear to be treating the merger as an in-house move. November’s political dealings may have been forefront in the spotlight, but energy exchange is certainly not slowing down outside of it.
Now one year into the projected four years analysts outlined of extra pipeline capacity in estimated overbuild, the market is content to keep up the play on the Delaware Basin. Notably, we saw Joseph N. Jaggers, CEO of Jagged Peak netting a 60,000 acre grab earlier this year in the Southern Delaware Basin, and Parsley Energy keeping up in their own show of acquisition that increased their company production growth by 60%. Soon to be drilling alongside Parsley in Wolfcamp B, smaller company Lilis is proving why cities like San Antonio, Texas are growing so quickly, and how eager locals are to get in on their own action.
Meanwhile, breaking March talks from Marathon Oil are affirming their intentions for the Northern Delaware Basin. Adding 21,000 net acres, they are showing an aggregate 90,000 acre Permian investment. Beneficial to all of these dealings are congressional actions providing more flexibility of crude oil exporting. With the current pro-energy White House ramping up oil expectations, forecasts provide for eases in drilling regulations feeding into increased exports. Companies across the industry are expected to see marked increases in 2017 in the current upward crawl of commodity prices, with developments in the Delaware Basin setting the bar high.
Gallatin Natural Resources, LLC
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Dallas, TX 75206