Mario Tama
Chevron (NYSE:CVX) was interested in Occidental Petroleum (NYSE:OXY), one of the largest producers in the Permian basin, in the early part of this year, though the oil giant’s interest has waned in recent months.
Chevron (CVX) has moved on to other, smaller targets after Occidental (OXY), which has a market cap of $54 billion, according to a WSJ report late Friday, which cited people familiar. Chevron CEO Mike Worth is said to be looking to do a large deal before he retires, the report added.
There are several options in the Permian, including CrownRock, one of the region’s biggest private produers, which has hired bankers to advise it on a potential deal and is looking a sale price of $10 billion to $15 billion, according to a Reuters report last month.
ConocoPhillips (COP) is also looking at potential deals in the shale patch, with smaller producers signaling they are for sale a the right prices, the WSJ said, citing people familiar.
The WSJ report comes after the publication late Thurday reported the Exxon Mobil (XOM) was nearing a potential $60 billion deal to purchase Pioneer Natural Resources (PXD), in what would be Exxon’s biggest aquistion since buying Mobil in 1999. Pioneer (PXD) is the Permian’s largest operator at 9% of gross production while Exxon is no. 5 at 6% of gross production.
Pioneer Natural (PXD) shares jumped 10% on the news on Friday. Occidental Petroleum (OXY) shares also rose 3.3% on Friday, likely in sympathy with Pioneer Natural (PXD) as investors see OXY as another potential Permian acquisition target.
“M&A has been sort of heating up,” Roth MKM analyst Leo Mariani said in an interview on Friday on CNBC. “I generally think you are going to see some more deals. I think the bottom line is we are kind of in a sweet spot for oil prices. I think you’ve got more sellers coming out of the woodwork now becauase the view is that the global economy could turn south over the next year and it’s probably a decent time for us to put our companies up for sale.”
Other Permian producers also saw their shares gain on Friday including Permian Resources (PR) +4.8%, Diamondback Energy (FANG) +4.2%, Coterra Energy (CTRA) +2.6% and Devon Energy (DVN) +2%.
“I think buyers want a lot of these premium assets, particularly in the Permian,” Mariani added. “Some of the other Permian publics, Matador Resources (MTDR), Permian Resources (PR) Diamond Back Energy (FANG) are all potential consolidation candidates in the Permian.”
