June 26

New Report Ranks Top 100 Private Oil Drillers

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After the merger and acquisition frenzy that has characterized the US upstream oil and gas business since 2020, many are left wondering who the most attractive remaining takeover targets might be. Because this spate of recent transactions cut so deeply into the roster of public companies, focus has turned to large, privately held companies who account for a big portion of the drilling of new wells.

A report published Tuesday by big energy data and analytics consultancy Enverus might serve as a good starting point/road map to identifying the most likely targets still standing. The report ranks the Top 100 Private Operators based on metrics like well counts, rig movements, and gross production numbers across the last year.

“Merger and acquisition activity, particularly those involving public buyers and private sellers during 2023, have reshuffled our rankings,” said Justin Lepore, lead consultant at Enverus and manager of Enverus’ Top 100 Private Operators list. “Inventory count and quality has also significantly driven private operator valuations, and in many cases, there has been a goal of growing production to become more attractive to takeout targets.”

Where the preponderance of merger activity in recent years has been focused in the prolific Permian Basin of west Texas and southeastern New Mexico, many will be surprised to see that none of the top three companies that make this list – Continental Resources, Ascent Resources, and Aetheon Energy – are big producers in that region. Continental Resources, the company built by current executive chairman Harold Hamm, is by far the largest producer on the list. Hamm took Continental public in 2007 but converted it back into a privately-held company in 2022.

Overall, the first 20 companies making the list are evenly distributed among the Permian, the Gulf Coast (which includes the Eagle Ford Shale), the Mid-Continent and the Rockies regions. The biggest privately held Permian producer, Mewbourne Oil, comes in at #4 on the list, followed closely by Endeavor Energy. Endeavor made a deal to be acquired by Diamondback Energy in February, but the transaction is currently undergoing an anti-trust review by the Federal Trade Commission.

Lepore provides details in the company’s release about these regional shifts in recent years, saying, “In Appalachia, the acquisition of Rockcliff Energy by TG Natural Resources combined their positions into one, creating space for a new entrant onto our list. Chesapeake’s asset sales in the Gulf Coast led to Wildfire and INEOS Energy joining the list this year as well. In the Bakken, asset sales by Ovintiv and Crescent Point resulted in significant upward moves for Grayson Mills and Kraken, while a Permian acquisition by VTX Energy and the entry of public-Civitas into the Permian reshuffled the list, with Tap Rock assets moving down and Hibernia being removed. Overall, it might be Rockies-weighted operators who saw the biggest shift as they now make up a lesser proportion of the top 20 names on the list, with new additions from Permian and Mid-con operators filling that gap,”

Houston-based Hilcorp, owned by billionaire Jeffrey Hildebrand, comes in at #6 on the list. Hilcorp is not a big player in the US shale space, unlike most of the biggest companies on this list, but operates more wells than the rest with more than 20,000.

Previously a Gulf Coast-focused company, Hilcorp made a big entry into the Rockies in 2017 with major acquisitions of assets from ConocoPhillips and XTO Energy in the San Juan Basin of New Mexico and Colorado. As I wrote about here in 2021, the company employs a business strategy of acquiring fields near the end of their life cycles, and then stimulating the wells and modernizing the equipment and operations to raise production.

All in all, this report is a valuable resource for those who, like me, are interested in learning who the big players are in the various regions of the country. It seems likely to also become a fit resource used by big players looking for merger or buyout targets. The full report can be obtained at this link.

Source: Forbes.com

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