In December, QEP Resources agreed to pay just shy of $1 billion—or $140,000 per flowing barrel of oil equivalent—for a decidedly oil-rich position deep in the heart of the Permian Basin, its first address in the swanky West Texas neighborhood. The Martin and Andrews counties properties already deliver 6,700 BOE per day, 68% true crude. While not the highest metric paid in the basin, it is well above the average $100,000 per flowing BOE, according to Jefferies Inc.

Why pay a new-entrant premium and lever up to some 2.2x debt-to-EBITDA in the process? Unless you're in the Marcellus core, oil drives share price.

“This acquisition is a direct result of the company's strategy to continue pivoting away from a gas-weighted portfolio in favor of a more balanced hydrocarbon mix,” said Tudor, Pickering, Holt & Co. analyst Matt Portillo. “QEP has traded at a discount to its gas-levered peers … and shares will struggle to outperform until the company can demonstrate multiple quarters of predictable oil-production growth.”

QEP chief executive Chuck Stanley gets that. Some 88% of the Denver company's production is gas, with anchor positions in the Pinedale Anticline, Uinta Basin and Haynesville shale. During the Permian acquisition conference call, Stanley repeated the mantra of “crude oil” in his remarks again and again, as if he had not had enough opportunity to savor those words in past investor conversations, and to drive home his point—QEP is oily now.

But only incrementally. QEP made its first oil-focused acquisition in late 2012 in the Bakken shale. Even with its $1.4-billion Antelope purchase there for $130,000 per flowing BOE, per Imperial Capital estimates, QEP's production stream will be just 20% oil pro forma the Permian deal, up from 8% before the 2012 acquisition.

QEP is one of several gas-weighted producers recently willing to pony up big-metric dollars to get a stake in oil.

Ultra Petroleum in October paid $650 million for 4,000 barrels per day in the Uinta Basin, $162,000 per flowing barrel. Ultra is renowned for its low-cost Wyoming gas plays. Chief executive officer Mike Watford confessed the company has not been very acquisitive, but sought out this deal as “it diversifies our cash flow and revenue stream.”

The program is immediately self-funding, said Watford, with some 575 low-cost vertical drill locations remaining.

“Given the company's current 97% gas weighting and vulnerability to weak gas prices over the past 12 to 18 months, this diversification to an oil-producing property makes strategic sense,” said Raymond James analyst Darren Horowitz in a report. After the deal, Ultra will be just 93% gas-weighted.

The downside, again, is high leverage to get there. Raymond James pegs a high 7.6x EBITDA multiple for Ultra in 2014, with debt-to-EBITDA going to 3.2x post-closing, one of the highest in its coverage. “We still see a company with above-average leverage and a strong dependence on natural gas prices.”

Even Oklahoma City-based Devon Energy took an opportunity to tap the A&D marketplace for immediate oil revenues.

Although it sold down its international and Gulf of Mexico holdings in recent years to focus on emerging onshore resource plays in the Lower 48 and heavy oil in Canada, scalable production from these organic-growth liquids projects has been slow to materialize. Production and reserves from the Barnett gas shale, which Devon was a pioneer in unlocking, remain its biggest asset.

So Devon planted a big flag in the core of the Eagle Ford shale in November with a $6-billion investment. Devon will pay $113,000 per flowing BOE, and about $18,000 per acre, by Baird Equity Research estimates. The 53,000 barrels equivalent of daily current production shot-puts Devon to a 50-50 liquids-to-gas mix, but oil represents a mere 12% of that stream pre-deal, an ongoing concern of investors.

“This deal represents a major milestone in our disciplined plan to enhance our balanced returns-focused portfolio, further shifting production toward our highest margin product, which is US light sweet crude,” Devon chief executive John Richels emphasized in an investor call.

Canaccord Genuity analyst Robert L. Christensen Jr. views added oil volumes as critical to Devon's story. “Greater oil growth and a higher mix of oil as a share of its total output are key elements to Devon receiving a higher valuation for its deeply undervalued E&P business.”

And like QEP, Ultra and Devon, oil-seeking latecomers can expect to pay a premium to ante up.

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