Upstream reassess the value of non-core land

Major oil and gas producers are reevaluating their portfolios with a newfound appreciation for previously overlooked assets, Hart Energy reports. While consolidations are pushing producers to reduce debt, the scarcity of premium shale acreage, particularly in the Permian Basin, has made operators increasingly reluctant to part with even non-core assets .

The scarcity of premium acreage, particularly in the Permian Basin, has led operators to reassess the value of their entire portfolios. Tier 2 and Tier 3 locations, once considered non-core, are now being retained and integrated into future development plans.

This shift has significantly reduced the pool of available assets for potential buyers, including private equity firms, to acquire. As a result, the industry is seeing renewed interest in legacy conventional assets, with major players exploring the sale of PDP-weighted assets in mature plays like the Permian's Central Basin Platform.

“We haven’t seen…companies getting rid of the lower value, $50 million to $200 million operated packages. There is a lot of debate within E&P C-suites about the wisdom of parting with operated inventory for cash.”? – Chris Atherton, EnergyNet president and CEO

?Other operators are following suit with the realization that yesterday's non-core inventory may hold untapped potential, especially as new horizontal drilling opportunities emerge in these areas. While Occidental is divesting some assets to reduce debt following its $12 billion CrownRock acquisition, it's doing so selectively, focusing on non-operated interests and midstream assets rather than core operated inventory.

Similarly, Diamondback is tapping into non-operated properties, minerals, and royalties to raise cash, demonstrating a strategic approach to portfolio management that preserves future drilling opportunities.