Land Rush in Permian Basin, Where Oil Is Stacked Like a Layer Cake
HOUSTON — Domestic oil production remains in a deep two-year slump, but a rash of multibillion-dollar deals are flashing sparks of recovery in the shale fields of the Permian Basin straddling Texas and New Mexico.
Exxon Mobil announced on Tuesday that it was acquiring 275,000 acres in New Mexico from the Bass family of Fort Worth for up to $6.6 billion in stock and cash. The deal came one day after another oil producer, Noble Energy, agreed to pay $2.7 billion to buy Clayton Williams Energy, giving it 120,000 oil-rich acres nearby in West Texas.
The deals are among the largest of more than $25 billion of mergers and acquisitions in the Permian since June, representing roughly one-quarter of the total spent by the oil and gas industry on such transactions worldwide over the last year. Companies like Anadarko Petroleum, SM Energy and EOG Resources are selling assets in other domestic fields to snap up parts of several fields that make up the basin, which is roughly the size of South Dakota.
“The Permian Basin has now become the crown jewel of the world’s oil and gas industry,” said Scott Sheffield, the executive chairman of Pioneer Natural Resources, a large producer in the area.
The Permian, in production for almost a century, is so bounteous that it fueled the Allied forces battling Germany and Japan during World War II. In recent years, though, the basin had been in decline, and big oil companies like Exxon Mobil sold assets to small independents that were willing to scrape the remaining barrels of old wells by flooding them with water and carbon dioxide.
Written by Clifford Krauss