It’s the largest acquisition we’ve seen in the Permian Basin, but will it change the dynamics of the prolific play? That’s what industry watchers are asking this week after it was announced that Concho Resources is acquiring RSP Permian in a $9.5 billion-dollar all-stock merger. The companies expect to create the largest unconventional shale producer of oil and natural gas in the Permian, and analysts are chiming in on whether the deal signals the beginning of consolidation in the basin. Seaport Global Securities said that corporate M&A has been a hot topic for both investors and the industry. This merger, the firm said, may take the conversation to a different level. It may begin an arms race in the region. Analysts from NatAlliance Securities told Bloomberg this “has the potential” to boost shares for small-cap drillers operating there and may trigger a run on them by bigger producers.
Several oil giants were lured into Mexico’s shallow water auction, particularly the Southeast Basin. Tens of millions of dollars in cash payments were pledged in that basin, given large discoveries that have already been made there. In all, about 46% of the 35 blocks offered across the three basins, received bids. Mexican officials said the results show investors’ strong interest. Speaking during a press conference after the round, Mexico’s energy secretary called the percentage of blocks awarded high.
OPEC Secretary General Mohammed Barkindo said that top producer Saudi Arabia and non-OPEC Russia were working on a long-term pact that could extend controls over world crude supplies. Saudi Crown Prince Mohammed Bin Salman confirmed the effort in an exclusive interview with Reuters while traveling in the United States, saying “We are working to shift from a year-to-year agreement to a 10 to 20-year agreement.” Russia has worked with OPEC in previous oil gluts to rein in supplies and push up prices, but a 10 to 20-year deal between the two would be unprecedented.
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