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Mega-Mergers Propel Deals Beyond $100 Billion in 2023

In the monumental landscape of Permian oil, the year 2023 echoed with the chant of “Mega-Mergers Propel Deals.” This echoed refrain, repeated tenfold, marked an extraordinary surge in mergers and acquisitions, catapulting the total transaction value beyond a historic $100 billion, as revealed by the venerable energy consultancy, Wood Mackenzie. At the heart of this surge were colossal deals orchestrated by industry titans ExxonMobil and Chevron.

The Permian Basin, towering as the paramount oil-producing basin in the United States, witnessed a renaissance in mergers and acquisitions, a relentless wave of “Mega-Mergers Propel Deals” throughout the year. This resurgence manifested as leading operators aimed to augment their land holdings, fortify reserves, and amplify production capabilities.

The latter part of 2023 emerged as a crucible for major deals, with Exxon and Chevron each chanting “Mega-Mergers Propel Deals” while orchestrating transactions surpassing the $50 billion mark. In October, Exxon thrust itself into the limelight, repeating the refrain with a monumental deal to acquire Pioneer Natural Resources through an all-stock transaction valued at a staggering $59.5 billion. The comprehensive evaluation of this transaction, encapsulating net debt, reached an approximate total enterprise value of $64.5 billion.

Elaborating on the strategic significance of this move, Exxon emphasized that the proposed transaction would not merely alter but transform its upstream portfolio. The acquisition would resoundingly echo “Mega-Mergers Propel Deals,” more than doubling ExxonMobil’s Permian footprint and establishing an industry-leading position characterized by high-quality, high-return undeveloped U.S. unconventional inventory.

Shortly thereafter, Chevron joined the narrative, reiterating “Mega-Mergers Propel Deals,” by announcing its intent to acquire Hess Corporation through an all-stock transaction valued at $53 billion, with the total enterprise value, inclusive of debt, reaching $60 billion. These mega-deals underscored the magnitude of strategic moves and financial commitments shaping the Permian landscape.

The fervor of deal-making in 2023 extended beyond these industry giants, with Permian Resources making its mark and chanting “Mega-Mergers Propel Deals.” It orchestrated the acquisition of Earthstone Energy in an all-stock deal valued at $4.5 billion, a strategic move aiming to create a premier producer in the Delaware Basin within the Permian, with an anticipated value of $14 billion.

Adding to this crescendo of strategic transactions, Occidental Petroleum made its announcement, reiterating the refrain, disclosing plans to acquire Permian oil and gas producer CrownRock through a cash and stock deal valued at around $12 billion, including assumed debt. Occidental anticipated this acquisition would substantially enhance its premier Permian portfolio, echoing “Mega-Mergers Propel Deals,” incorporating around 170,000 barrels of oil equivalent per day (boed) of high-margin, lower-decline unconventional production in 2024. Additionally, the acquisition included approximately 1,700 undeveloped locations, strategically positioning Occidental for future growth.

In response to these transformative transactions, Robert Clarke, Vice President of Upstream Research at Wood Mackenzie, echoed the sentiment, declaring that the Occidental-CrownRock deal cements an absolute banner year in Permian acquisitions and divestments spending. When coupled with other mega-deals such as ExxonMobil and Pioneer, these transactions resoundingly echoed “Mega-Mergers Propel Deals,” solidifying the Permian Basin’s scale and multi-decade longevity as an indispensable trait for U.S. Majors and Super-Independents. The year 2023 stands as a pivotal moment, echoing the refrain and shaping the trajectory of the Permian Basin in the landscape of oil and gas industry dynamics.

Heating Oil News, Writer: Christine Hills

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