Dan Pickering, PEP Chief Investment Officer, weighs in on potential deal activity following Chevron's (NYSE: CVX) agreement to buy Hess (NYSE: HES) and the announcement of Exxon Mobil's (NYSE: XOM) merger with Pioneer Natural Resources (NYSE: PXD). In the Wall Street Journal article, Dan explains how a scarcity premium could start to emerge as the "FOMO [fear-of-missing-out] component" accelerates.
"Occidental Petroleum, Devon Energy and Diamondback Energy are among the largest producers in the Permian, according to data from Enverus, and are large enough that they could be both a potential target or an acquirer, according to Pickering. All three have estimated resource lives of roughly 30 years or more, according to an analysis from Goldman Sachs.
While EOG Resources is also one of the top producers there, the company historically has been more interested in asset acquisitions rather than corporate deals, Pickering added. Smaller Permian producers, those with sub-$10-billion market capitalizations, include Matador Resources and Permian Resources PR 0.27% increase; green up pointing triangle, which itself agreed to acquire peer Earthstone Energy in August.
ConocoPhillips could be another acquirer. Given European oil majors’ lagging valuations and the pressure they face to decarbonize, they seem less likely to throw their hats into the ring." (Wall Street Journal)