Consolidation appears to be the United States petroleum industry’s buzzword for this year as companies spent a collective $250 billion in the race to get their hands on cheaper reserves in preparation for a greater number of challenges in the coming year.
2023 saw increased demand for oil worldwide as governments put their economic recovery plans in motion, thus fueling the interest of those wanting a bigger slice of the petroleum pie. Indeed, oil giants Chevron, Exxon Mobil, and Occidental Petroleum collectively spent $135 billion during their buying spree this year. Not to be outdone, ConocoPhillips spent the past couple of years finalizing two major agreements.
The Big Prize
But while it’s been a good year for these four companies, all of them have their eyes on the Permian Basin which straddles the western region of Texas and part of New Mexico.
The Permian Basin is considered the largest shale oil field in the US – and all four of this year’s big winners seek to gain control over more than half of the field’s production in the years to come. As it is estimated that the Basin could yield up to seven million barrels a day come late 2027, each company expects to produce at least a million barrels a day from the area.
Such plans are dependent on whether or not Endeavor Energy Partners will sell the bulk of its holdings in the area. Endeavor is presently the largest private shale producer operating within the Basin, and the sale could help concentrate domestic oil output.
But dealings regarding the Permian Basin are just the tip of the iceberg as insiders say that several deals are currently in the offing. Indeed, in a survey conducted by the Federal Reserve Bank of Dallas earlier this month, around 75% of energy sector professionals see deals costing $50 billion or higher could occur within the foreseeable future.