Delaware appeal may revive Permian M&A prospects

Delaware appeal may revive Permian M&A prospects

New York, 3 June (Argus) — The 2020-21 surge of Permian basin mergers did not take all the life out of M&A in the region, as one sub-basin — the Delaware — may be primed for more activity.

Relative to other parts of the Permian such as the Midland basin, the fragmented nature of ownership in the Delaware — with smaller public explorers looking to scale up and private equity searching for an exit — suggests more tie-ups could be on the way. At the same time, privately held operators are set to help drive output from the Delaware — located in far west Texas and southeastern New Mexico — to a record high this year, according to consultancy Rystad Energy.

A recent $7bn merger of equals between Centennial Resource Development and privately held Colgate Energy Partners could be a harbinger of further deals to come as publicly traded companies seek to extend their inventory of acreage. "Longer term, we do have more of these types of deals," consultancy Enverus' director Andrew Dittmar predicts. "The small and medium-sized public companies need to get inventory — a lot of them are short — and they need cash flows not just for three or