Feb 12, 2024

News from the Oil Patch: Blockbuster mergers and acquisitions in Permian Basin continue

Posted Feb 12, 2024 5:43 PM
Photo by Pixabay
Photo by Pixabay

Eagle Communications

The wave of blockbuster mergers and acquisitions in the Permian Basin continues.

Diamondback Energy Inc. agreed to buy Endeavor Energy Resources in a $26 billion cash-and-stock deal. The new company will be the biggest operator in the Permian Basin of Texas and New Mexico. Diamondback will fork over $8 BILLION in cash and more than 100 million shares of stock.  This is the fourth mega-merger in the Permian in the last four months.

Endeavor is one of the last remaining closely-held producers in the Permian basin. It has attracted the interest of Exxon, Chevron and ConocoPhillips.

Regulators are imposing additional limits on oilfield wastewater disposal near the epicenter of an earthquake near Prague, Oklahoma. The Oklahoma Corporation Commission is shutting down disposal wells deeper than the so-called Woodford formation within three miles of the epicenter of the earthquake February 3.

Another directive dealt with wells in a wider area reaching into the much deeper Arbuckle formation.  Wells within ten miles of the quake are ordered to shut down by February 17. Officials say a gradual shutdown process is necessary to avoid sudden pressure changes that could result in more quakes. The state will not grant new disposal permits for disposal deeper than the Woodford formation within six miles of the epicenter. The magnitude 5.1 quake east of Oklahoma City was felt in at least four states, including Kansas. No injuries were reported but there were reports of minor damage in and around the town of Prague.

Last month, U.S. crude production dropped from the second highest ever to the lowest tally in 13-months, because of winter weather. It has increased a million barrels per day in the three weeks since. U.S. operators produced 13,335,000 barrels of crude oil per day in the week through February 2. That's tied for the second-best output ever, set three weeks earlier.

The Energy Information Administration said U.S. crude inventories increased 5.5 million barrels to just over 427 million barrels as of February 2. That's about four percent below the five-year seasonal average.

U.S. crude imports increased by nearly 300,000 barrels per day to just under seven million barrels per day. Four week average imports are down nearly six percent compared to last year.

U.S. crude exports were down by nearly 300-thousand barrels to just under 3.6 million barrels per day. Exports of petroleum products were up more than 300-thousand barrels per day.

The Rotary Rig Count from Baker Hughes was 623, up four gas rigs from last week. Louisiana and New Mexico were each up three rigs, Texas was down two and Oklahoma was down one rig.

Independent Oil and Gas Service reports a dramatic change in the Kansas Rig Count. Last week IOGSI changed the status of several rigs that have been listed as "active" but "waiting on orders." Those rigs are now listed as "idle" and "inactive." As a result of the change, the list of active rigs dropped by 11 in eastern Kansas and by 12 west of Wichita. The count is down 58% from a month ago, and 57% lower than a year ago.

Operators in Kansas filed 74 intent-to-drill notices last month compared to 129 in January of last year. The Kansas Corporation Commission reports one new intent so far this year in Barton County and one in Russell County.

Kansas regulators okayed eight new drilling permits last week, all of them west of Wichita. That's 81 new permits this year, compared to 168 by this point last year.

Independent Oil & Gas Service reports 23 newly completed wells, with 18 in Western Kansas including one well in Ellis County and another in Stafford County. That's 137 well completions so far this year, compared to 2,540 a year ago.