Asset divestitures lead to feeding frenzy for small independents

As oil majors and large independents continue to optimize their portfolios, a wave of asset divestitures has hit the market, sparking intense interest from smaller players eager to expand their holdings. From the Permian Basin to the Gulf Coast, these strategic sell-offs are providing unprecedented opportunities for growth-oriented companies to acquire high-quality acreage and production at attractive valuations.?

With core acreage becoming increasingly expensive, these bolt-on acquisitions and grassroots leasing efforts are proving to be an effective strategy for smaller independents to build scale and compete with larger players.

Both Permian Resources and Riley Exploration Permian have recently bolted on additional Delaware Basin acreage. Even in the mature Giddings Field of South Texas, Magnolia Oil & Gas has expanded its position with a 27,000-acre acquisition. In the Permian's Delaware Basin, Kinetik Holdings has emerged as a key player, announcing a $1.3 billion series of transactions. Meanwhile, Occidental Petroleum is exploring the sale of over $1 billion of Barilla Draw assets as it seeks to reduce its debt load.?

These divestitures create opportunities for smaller independents to secure a foothold in the prolific Delaware Basin, and benefit from the region's robust growth potential. However, poor land data management can lead to divestitures raising less money than anticipated, and purchasing E&Ps may miss out on the full value of their newly acquired assets if they fail to properly integrate them into their existing portfolios.?

As the feeding frenzy continues, industry experts anticipate a steady stream of M&A activity throughout 2024. However for smaller independents battling to remain competitive, properly integrating land assets is critical to ensure they get as much value as possible from the bolt-ons.