Drilling Pad: Can drilling permits predict M&A targets?
Can drilling permits predict which oil companies are M&A targets? Maybe they can…
Earlier today, Midland-based Diamondback Energy announced a pair of deals to buy Permian Basin rivals QEP Resources and Guidon Energy for a combined $3 billion.
Like other oil companies, Diamondback has scaled back its operations during the industry downturn caused by the coronavirus pandemic but Midland independent has consistently kept drilling.
Diamondback has filed 256 drilling permits with the Railroad Commission of Texas so far this year. That’s a 37 percent drop from the 406 drilling permits the company filed last year but an indicator that the company is doing better than others, setting it up as a buyer.
Colorado-based QEP, on the other hand, has only filed 29 drilling permits in Texas so far this year, a 59 percent drop from the 70 filed last year. But perhaps more revealing, the company has not filed a drilling permit since late July. Those paying attention to drilling permit filing could have perhaps labeled QEP as a distressed driller and acquisition target.
Irving-based Guidon has filed 22 drilling permits in Texas so far this year. That’s a 55 percent drop compared to the 49 filed last year but those closer paying attention to their filings would have noticed that the company took three separate drilling permit breaks that each lasted months.
The drilling permit game is normally one of which company filed permits for what projects but perhaps, looking at who is not filing or who is taking lengthy breaks, could reveal M&A targets in the oil patch.
Permian Basin
Dallas oil company Matador Resources is breaking a two-month drilling permit break to develop a pair of horizontal wells in the Delaware Basin. The company is seeking permission to drill two oil and natural gas wells on a lease in Loving County targeting the Two Georges field of the Bone Spring formation down to a total depth of 10,400 feet.
Eagle Ford Shale
San Antonio-based Lewis Energy is drilling the company’s first directional well nearly 18 years. The company is seeking permission to drill the directional well on its James Trust 951 lease where it plans to target the Tom Walsh field of the Olmos formation down to a total depth of 7,500 feet
Haynesville Shale
Longview-based exploration and production company R. Lacy Services plans to drill a pair of horizontal natural gas wells on its Pearl lease in Panola County. The wells target the Carthage field of the Haynesville formation down to a total depth of 12,000 feet.
Barnett Shale
French oil major Total plans to drill four horizontal wells inside Arlington city limits. Located on a drilling pad off South Collins Street across the road from the Arlington Municipal Airport, laterals for the wells run under a nearby neighborhood targeting the Newark East field of the natural gas-rich Barnett Shale at a total depth of 9,000 feet.
Conventionals
Drilling is rare in the Hill Country’s San Saba County but Houston-based Quidnet Energy plans to drill an exploratory test well on its Desertpeony lease about seven miles northwest of Richland Springs. The vertical well targets the Wildcat field at a vertical depth of 600 feet. Quidnet is developing energy storage technology involving geomechanical pumped storage, which uses turbines and pressurized water deep underground to create a loop that generates electricity.
Texas Drilling Permit Filings
(Monday, Dec. 14 through 20)
- Diamondback E&P Llc 13
- Anadarko E&P Onshore Llc 8
- Discovery Operating, Inc. 5
- Tep Barnett Usa, Llc 5
- Hibernia Resources Iii, Llc 5
- Burlington Resources O & G Co Lp 4
- Blackbeard Operating, Llc 4
- Cog Operating Llc 4
- Wpx Energy Permian, Llc 4
- Sm Energy Company 3
- Nbx Energy, Llc 3
- Black Swan Operating, Llc 2
- R. Lacy Services, Ltd. 2
- Katsco Energy, Inc. 2
- Cgs Operating, Llc 2
- Reo Operating Llc 2
- Matador Production Company 2
- Stronghold Energy Ii Oper, Llc 2
- Surge Operating, Llc 2
- Parsley Energy Operations, Llc 2
- Highpeak Energy Holdings, Llc 2
- Kinder Morgan Production Co Llc 2
- Silverbow Resources Oper, Llc 1
- Trio Consulting & Management,Llc 1
- D.J. & T. Energy 1
- Bra-De Oil & Gas Operating, Llc 1
- Green Century Exp & Prod, Llc 1
- Amble Petroleum Co., Inc. 1
- Steward Energy Ii, Llc 1
- Luxe Operating Llc 1
- Hilcorp Energy Company 1
- El Paso Natural Gas Co, L.L.C. 1
- V-F Petroleum Inc. 1
- Mewbourne Oil Company 1
- Sabine Oil & Gas Corporation 1
- Endeavor Natural Gas, Lp 1
- Guidance Oil Developers,Inc.(1) 1
- Oak Energy, Llc 1
- B D Production Co., Inc. 1
- Fdl Operating, Llc 1
- Tag Operating Company, Inc. 1
- Penn Virginia Oil & Gas, L.P. 1
- Texland Petroleum, L.P. 1
- Quidnet Energy Deployment Llc 1
- Upp Operating, Llc 1
- Geosouthern Operating Ii, Llc 1
- Cedar Oil Company 1
- Raven Forest Operating, Llc 1
- Lewis Petro Properties, Inc. 1
Source: Railroad Commission of Texas