Percussion Petroleum II is looking to fetch up to $1.5 billion by selling around 25,000 net acres in the Permian shale basin, three sources told Reuters on June 17, betting on rising oil prices to pocket more than double what it paid in 2021.
The Houston-based oil and gas company bought the bulk of its assets in one of the most prolific crude-producing areas in the U.S. from Oasis Petroleum Inc. a year ago for $375 million plus contingent payments.
Buyers have been keen to gain a toehold in the basin as oil prices surge to triple digits, while backers of private shale companies such as Percussion are seeing it as a chance to exit their investments with big profits.
U.S. crude oil futures have surged about 50% to around $109/bbl from June 29 last year when Percussion closed its deal with Oasis.
Founded in 2020 with investment from private equity firm Carnelian Energy Capital, Percussion produces around 21,000 boe/d from more than 375 drilling locations as of June, according to a marketing document seen by Reuters.
It expects output from the assets to rise to as much as 33,000 boe/d by the end of the year.
The company is now working with an adviser for the sale of assets, the sources said, requesting anonymity as the talks are confidential.
Percussion and Carnelian did not respond to requests for comment. Private equity firm Old Ironsides Energy, also an investor in Percussion, declined to comment.
Percussion’s assets are a part of the Delaware formation, which has been among the most active regions for multibillion dollar deals in recent months.
The Permian Basin, spread over Texas and New Mexico, is estimated to reach a record output of 5.316 million bbl/d in July.
Earlier this week, legendary oilman Harold Hamm offered to take Continental Resources Inc. private at a valuation of more than $25 billion, months after it entered the Permian Basin by buying Delaware Basin acreage from a rival.
Last month, Centennial Resource Development Inc. agreed to merge with Colgate Energy Partners to create a $7 billion Permian-focused oil producer.
Recommended Reading
Analysts: Midstream MLPs Outperforming S&P in 2024
2024-08-14 - The midstream sector has been able to take advantage as capex spending slows and cash flows increase.
West Texas Hold ’Em: Permian Plays Pipeline Poker
2024-07-16 - The consensus is that the Permian Basin needs another major gas pipeline soon. Midstream companies are trying to figure out when … and who will make the move.
Permian Gets Gas Relief as ADCC Pipeline Begins Commercial Service
2024-07-12 - The ADCC Pipeline will source volumes from the Permian Basin, Eagle Ford Shale and Texas Gulf Coast for transport to Cheniere’s Corpus Christi LNG facility.
Williams Begins Louisiana Project Despite Lingering Legal Dispute
2024-07-22 - Williams Cos. Informed FERC that the Louisiana Energy Gateway project will begin construction despite an ongoing dispute with midstream rival Energy Transfer.
Blackcomb Takes Lead in Permian Pipeline Race for 2026
2024-08-07 - With WhiteWater Midstream’s announced Blackcomb, other proposed lines by Energy Transfer, Targa Resources and Kinder Morgan’s may shift to a later date or be scrapped.