Along with the excitement of a new year, comes great news for the Permian Basin. On Tuesday, January 17, 2017: Exxon Mobil announced that they had paid “$5.6 billion in stock to acquire companies owned by Texas’ Bass family that control parts of the Permian in New Mexico. The purchase roughly doubles Exxon’s holdings in the basin, adding acreage with an estimated 3.4 billion barrels of oil equivalent.”
The article on yahoo.news, goes on to say, “The deal is the largest oil and gas acquisition in the United States since crude prices crashed in November 2014, according to Houston-based oil and gas research firm PLS.”
This comes on the heels of another announcement made the previous day that independent oil and gas company, Noble Energy, had acquired 71,000 acres of land in both the Southern Delaware portion of the Permian Basin and the Permian Basin from Clayton Williams Energy. This $2.7 billion-dollar deal will provide Noble Energy with 4, 200 drilling locations in their now 120,000 acres of land that will produce approximately two billion barrels of oil equivalent.
To go along with all this great news, comes word that land acquisitions in the Permian Basin will continue to grow—as a slew of oil and gas producers seek to enhance their presence in this area where drilling costs are relatively low. In fact, Canaccord Genuity, a full-service investment banking and financial services company, predicts the growth potential in the Permian Basin will last through 2017 and continue on into the year 2018.
Located in west Texas and the southeastern part of New Mexico, this area contains one of the world’s thickest rock deposits. Permian comes for the geological term referring to the Paleozoic Era that existed 280 to 230 million years ago, located in Perm Russia where certain rocks were found. The first of what would become almost a countless number of drills was completed in 1921 and grew exponentially when drilling was determined to be economically justified because of the high demand for oil during World War II. Recently, the area has become a hotbed for drilling since geologists discovered multiple subsurface layers where operators could drill horizontally to extract oil and gas.
According to Claudia Assis, a reporter for marketwatch.com, the Energy Information Administration’s November drilling productivity report showed that the Permian Basin now, “holds nearly as many active oil and gas drilling rigs as the rest of the United States combined—and that includes offshore rigs in the Gulf of Mexico.”
For the Permian Basin, 2017 looks to be a banner year. For more information, check here!