PERMIAN (MB) REGIONAL REPORT

Energy Advisors Group has released a review of the Midland Basin as a continuation of our Market Monitor Series and thought leadership efforts. This 46-page Report provides unique perspectives on M&A, E&P, and Capital Markets activity in the play.

Observations & Takeaways---

A&D - Record Market as Exxon Takes Pioneer

• Before XOM’s $64.5 billion buy of PXD, Midland Basin A&D YTD to 10/23 tallied $9.8 billion – the highest pace since 2014 – for context this compares to $7.2 billion in the Delaware Basin and $7.9 billion in the Eagle Ford
• With XOM’s buy, Midland Basin A&D 2023 YTD tally of $74.3 billion will set an all-time annual record
• Ovintiv executes three buys for $4.3 B and Civitas does two deals for $4.3 billion
• Buyers can use equity as currency and/or able to tap debt markets for deal support
• In the latest larger deals, acreage values running from $25,000 to $40,000 per acre as buyers seek to lock up high quality inventory to support volumes over a longer period of time
• ExxonMobil tie up of Pioneer propels XOM to #1 producer at over 1,000,000 boe/d (61% oil)

E&P - Continuing Play Expansion Aerially and Vertically

• The top 3, (XOM+PXD, FANG, Endeavor) produce ~48% of Midland Basin gross operated horizontal volumes
• Same Top 3 running ~44 rigs or ~40% of Midland Basin’s rigs and have 40% (>1,400) of permits in the last six months
• Multiple benches within the Wolfcamp and Spraberry account for >80% of all production
• Since 2018, ~4,000 new Wolfcamp A wells and ~3,000 Lower Spraberry wells
• 24 of 25 top wells since December 2022 achieve peak IP30 >2,000 boe/d, notably including one deeper Barnett producer drilled by ConocoPhillips
• Diamondback and Five Point Energy join forces to create Midland Basin’s largest independent water platform (Deep Blue) with >2,000,000 bbl/d water disposal capacity + large fresh water and recycle water capabilities
• Multiple Operators achieving success in Northeast Howard County along the Eastern Shelf edge

Capital Markets - Healthy Support Plus CrownRock and Endeavor Energy Summaries

• In the last two years, the S&P Oil & Gas Index has returned 39% vs. -7% of the S&P 500
• This dynamic is allowing select public companies to use their higher share prices as equity currency to do transactions
• P/E’s role peaked in 2017 – furthermore YTD 2023 they have sold $14.3 billion in deals and bought $3.4 billion
• Of 12 new P/E firms in 2023, five are Permian focused, five are multi-region and two are Rockies focused
• The spotlight is on two prized sweetheart private Permian producers (Endeavor and CrownRock) – CrownRock is publicly courting buyers and potential suitors reportedly including COP, FANG, DVN, MRO and Continental Resources

Operational Highlights - ProForma XOM + PXD, Deep Blue Water System, Howard County Extension

• Our firm has also put together some slides on operational insights from leading Midland producers
• Ovintiv’s Sugarloaf Development in northern Martin County, 7 well pad targets 4 benches (Middle Spraberry, Jo Mill, Upper Spraberry, Dean) and achieved superior results averaging 1,500 bbl/d IP30 per well
• Bayswater, High Peak, Surge, Ovintiv and SM are all successfully extending the play northeast in Howard County along the Eastern Shelf edge 
• Diamondback and Five Point Energy team up to create Deep Blue Midland Basis LLC - the largest Midland Basin water infrastructure platform 
• ConocoPhillips scores with a Barnett producer ranked in the Top 25 new wells since December 2022 achieving peak IP30 of 2,309 boe/d with a 13,000’ lateral at 12,144’ TVD  
• CrownRock achieves an operational milestone at year-end 2022 and no longer is required to drill any vertical wells to maintain its acreage holdings

Energy Advisors is working hard to expand our thought leadership and look forward to providing additional market insight for our clients through regional perspectives, M&A analysis and market monitor. 

Our firm has been serving the needs of buyers, sellers and capital providers for over thirty-five years.

TO LEARN MORE:

Energy Advisors Group

Brian Lidsky

Director

Phone: 713-600-0138

---Email: [email protected]

Corporate Office:

4265 San Felipe Ste 650

Houston TX 77027

Corporate Switchboard: 713-600-0123