Is Double Eagle IV the Most Coveted PE-backed Permian E&P Left?

Double Eagle IV is bringing online new Permian oil wells and ramping up production in the Midland Basin.

Double Eagle IV has quietly added to its Midland Basin acreage footprint since the private E&P launched in 2022 with over $1.7 billion in investor commitments.

The latest iteration of Double Eagle is led by co-CEOs Cody Campbell and John Sellers, who in 2021 guided Midland Basin E&P Double Eagle III—a subsidiary of DoublePoint Energy LLC—through a $6.4 billion sale to Pioneer Natural Resources.

After reloading with dry powder from EnCap Investments, Apollo Natural Resources and Magnetar Capital, Double Eagle IV is back to buying and drilling in the core of the Midland Basin.

And with multibillion-dollar acquisitions getting inked all around the company’s land, operators and industry experts are keeping a close eye on Double Eagle IV.

Analysts say the experienced Double Eagle IV team has quickly developed one of the more attractive inventory portfolios among the shrinking list of private producers still standing in the Permian.

Double Eagle, unlike many of its smaller private peers, is drilling some of the most core portions of the Midland Basin—directly adjacent to where major players such as Pioneer, Diamondback Energy, Exxon Mobil Corp. and ConocoPhillips are drilling wells of their own.

Double Eagle IV’s operating arm, DE IV Operating LLC, is listed as operator on leases in Martin, Reagan, Midland, Ector, Glasscock, Upton, Andrews and Howard counties, Texas, according to Texas Railroad Commission (RRC) data.

The company’s Permian oil production totaled nearly 1.12 MMbbl this January, or an average 38,700 bbl/d, per the RRC’s most updated figures.

That’s up from total oil volumes of 96,000 bbl, roughly 3,100 bbl/d, that Double Eagle IV produced in January 2023.

But Double Eagle IV’s value isn’t based on just existing oil production; It’s also based on the company’s high-quality portfolio of undrilled land.

Enverus Intelligence Research estimates that Double Eagle IV holds an attractive inventory of over 300 gross operated drilling locations across the core of the Midland Basin.

“That puts [Double Eagle IV] in a nearly unique scale among the private equity-backed privates that are left in the Permian,” said Andrew Dittmar, senior vice president at Enverus.

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Gushing in Midland

Most of Double Eagle’s oil production is coming out of Reagan and Martin counties, where the company has actively drilled wells targeting the Spraberry and Wolfcamp intervals.

Many of the company’s most productive wells since launching have been drilled on Mabee Ranch leasehold in southwestern Martin County, records show.

Double Eagle IV brought online a three-well pad on the Mabee P 1-2 lease—a parent well and two child wells—each of which went to sales between February and March 2023.

The wells were drilled to depths ranging between nearly 8,000 ft and 9,500 ft targeting the Wolfcamp, Dean and Spraberry formations. Lateral lengths on the three wells averaged 9,762 ft.

Through January 2024, cumulative oil volumes from the Mabee P 1-2 lease reached over 502,000 bbl.

The company has drilled and completed several other adjacent horizontal wells on Mabee leases since the start of 2023.

More recently, Double Eagle has been drilling and completing wells to the south on Studley leases in Reagan County.

The company brought online a two-well Spraberry pad on the Studley AV I 28-5 lease between December 2023 and January 2024.

The parent well, #4409H, produced 2,586 bbl during a 24-hr initial production test in late December. Well #4409H reached a vertical depth of 5,734 ft and featured a roughly 10,000-ft lateral.

A child well, #4209H (10,000-ft lateral), tested at 908 bbl in mid-January after reaching a vertical depth of 5,736 ft.

Both wells produced cumulative oil volumes of 86,237 bbl through January 2024—less than two full months in operation.

Double Eagle has drilled additional wells on Studley leases that have gone to sales this year.

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Standing out

The land surrounding Double Eagle IV’s position is awash in a historic deluge of corporate consolidation, with many of the area’s oldest and largest operators getting scooped off the drawing board in a matter of months.

Exxon Mobil’s acquisition of Pioneer Natural Resources for $64.5 billion, including Pioneer’s net debt, will reshape the pecking order in the Midland Basin.

Diamondback Energy’s acquisition of Endeavor Energy Resources for $26 billion, including debt, was the largest takeout of a private oil producer on record, per Enverus data.

Occidental is making a smaller, albeit still massive, $12 billion acquisition of private E&P CrownRock LP for more running room in the Midland Basin.

Other smaller publics—Civitas Resources, Ovintiv Inc., Vital Energy and SM Energy—have also gotten deeper in the Midland Basin through M&A in the past year.

After well over $100 billion in dealmaking in the past 12 months, acquisitive operators are left with a much smaller slice of the Midland Basin pie to parse through for potential deals.

That’s why Double Eagle IV stands out so much among the rest of the private equity-backed E&Ps remaining in the Permian.

Experts anticipate Double Eagle IV will eventually approach the market for a sale, like the exit strategies for previous iterations of the company.

“They’re already at a scale that they could go to market if they chose,” Dittmar said, “and there would be substantial interest from most of the major public companies in the Midland Basin, including names like Ovintiv, Civitas, Oxy and Diamondback.”

The DoublePoint sale to Pioneer in 2021 included about 97,000 net acres and production of approximately 100,000 boe/d.

Double Eagle Holdings II LLC sold to Parsley Energy in 2017 for $2.8 billion. The deal included 71,000 net acres but just 3,600 boe/d. However, that sale was during a time when buyers valued undeveloped land much higher than they valued existing production, Dittmar said.

Double Eagle IV declined to comment for this article.

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