As oil recovers, u. s. firms descend on the permian basin in west texas – oil and gas news


Here in the Permian Basin of West Texas, the largest U.S. American market futures oil patch, the industry poured more than $28 billion into land acquisitions last year – more than triple what they spent in 2015.

Those deals set the stage for much larger investments needed to extract the oil from the ground – and they illustrate how the Permian Basin has become the epicenter for the U.S. Us dollar indian rupee exchange rate shale resurgence after a historic oil price crash.

“We could easily see an extra 100 rigs out here in the Permian by June,” said Josh Clawson of Gesco, a Midland, Texas, electrical contractor for oil drilling rigs.

That doesn’t necessarily mean the investment blitz will extend to other U.S. The binary oil regions. Bloomberg stock futures cnn The industry’s focus on the Permian reflects the simple math of profitability and a complex set of geographic advantages and technological advances that make it cheaper to drill here than in other major U.S. Binary to letter converter oil regions.

Permian Basin producers make money at the current crude price CLc1 of about $53 per barrel because of the region’s sprawling pipeline network, abundant labor and supplies, and warm winters that allow year-round work.

So at least for now, the Permian accounts for a disproportionate share of the industry’s recovery.

1 usd to idr The amount spent on Permian land purchases and leases last year represented 39 percent of all deals nationally and tripled the activity seen in any other major U.S. Binary addition calculator oil region.

Judging by the confident flow of capital into West Texas – a swagger bred in part by aggressive cost-cutting and innovation through the downturn – U.S. Futures in stock market oil companies have retained their appetite for risk.

What remains to be seen, should per-barrel prices rise further, is whether companies continue to expand operations in the Permian as projects start to make more economic sense in other oil states including North Dakota, Colorado and Wyoming.

Oil companies started the new year with announcements of about $9 billion more in Permian land deals, including a $6.6 billion Exxon Mobil Corp (XOM.N) buy that doubled its acreage in the basin.

The companies that have sold or leased their holdings have typically been smaller, privately-held firms aiming to take advantage of the high land prices rather than invest the millions of dollars needed to pump the oil.

The demand for West Texas acreage has sent land prices soaring in the last two years. Usd vs gbp chart One deal in December 2016 priced out at more than $63,000 an acre, double the price paid in similar deal earlier that year.

But Double Eagle’s founders, who have snapped up 65,000 acres in the past two years, now plan to start drilling their holdings in addition to speculating on land values. Binary search example The firm is preparing for an initial public offering with an expected valuation of $3 billion, according to a half dozen bankers who have examined its value.

While land prices have risen fast, the cost of acreage still represents a small part of the profit equation. Kwacha to usd Most of the expense is tied to drilling and getting the oil to market.

Buyers of Permian acreage are moving quickly to tap their holdings. 1 aud to usd The number of rigs across the basin is up more than 28 percent in the past year; oil job postings here have more than doubled from lows of last March; and sales tax receipts for the region starting rising in November after falling for two years.

Chevron Corp (CVX.N), which controls more than 1 million acres of Permian land, last year opened a new regional office in Midland. Marriott hotel rates EOG Resources Inc (EOG.N) and Occidental Petroleum Corp (OXY.N) have office expansion plans of their own.

Concho Resources Inc (CXO.N), which is headquartered in Midland, has been renovating and expanding its downtown Midland offices and funding community projects, including a $400,000 makeover of a downtown park.

Permits for new home construction jumped 50 percent in November, the latest period for which data are available. Convert binary to text And dinner at Midland’s Texas Roadhouse Inc (TXRH.O) now requires a half-hour wait.

The resurgence gained momentum last summer when industry veteran Mark Papa’s Silver Run Acquisition Corp bought Centennial Resource Development Inc (CDEV.O), which controls premium acreage across the Permian.

Papa is considered one of the preeminent oil executives of his generation, and his move from retirement back into the oil patch was seen as a sign by many that the Permian was heating up again.

“The Permian Basin represents the foundation of Apache’s North American growth strategy,” said Gary Clark, vice president of investor relations at Houston-based Apache.

Apache estimated the land had more than 3 billion barrels of oil, sparking speculation that the Permian holds far more oil than anyone had expected in a previously overlooked part of the basin.

Anadarko Petroleum Corp (APC.N) sold acreage in east Texas earlier this month for $2.3 billion as it looked to raise cash to develop the 600,000 acres of Permian land it controls.

Many of recent Permian deals were paid for with cash from secondary stock offerings, an unusual step that investors typically dislike because it dilutes their stakes in companies. Convert usd to cny But in the Permian, it seems, investors see the payoff.

Diamondback Energy Inc (FANG.O) paid more than $3 billion last year for Permian land in two separate transactions – deals financed through stock offerings. Funny quotes with pictures Diamondback executives said the deals were immediately profitable and should provide years of growth.

Executives at SM Energy Co (SM.N) and RSP Permian made similar comments in announcing their own deals late last year for $1.6 billion and $2.4 billion, respectively.

While shares of top Permian producers have risen in recent weeks, Wall Street’s appetite for stock is unsated. Jpy usd exchange rate Of the 44 analysts covering Pioneer Natural Resources Co (PXD.N) – considered by many investors to be the top Permian producer – forty recommend buying it, according to Thomson Reuters data.

“The industry is learning where the value really is,” said Chuck Meloy, chief executive of Endeavor Energy Resources LP [EERL.UL], one of the largest private oil producers in the region. Gbp usd chart live “And that’s out here in the Permian.”