By Mitch Borden
For weeks, two American oil companies fought over who would buy Anadarko Petroleum. At first, Chevron’s deal to acquire Anadarko seemed to be set until Occidental Petroleum made a past higher bid public. Then, after some back and fourth Occidental won the bidding war after it made a deal estimated to be worth over $55 billion dollars.
This large purchase is an indication to some analysts and industry insiders that the Permian Basin may see more companies consolidate their operations in the coming days.
Anadarko’s territory in the Permian Basin is the main reason the oil and gas company was such an appealing purchase for Chevron and Occidental, also known as Oxy. By buying it, Oxy has now become one of the largest oil producers in the region. That expansion, said Greig Aitken, an energy analyst at Woods Mackenzie, sets up Oxy for future success.
“The biggest players in the Permian will probably be the most successful because they’re the most efficient.”
Aitken expects to see more mergers and acquisitions of companies primarily focusing their activity in the Permian Basin like Pioneer Resources, Endeavor Energy, or Concho Resources. That’s because larger companies are better equipped to deal with challenges facing West Texas operations — like transporting oil.
Aitken also believes many Permian Basin producers are undervalued by the stock market, which makes them prime targets for larger oil companies.
He said, “If the market isn’t adequately identifying your value then someone in the industry will and I think that’s what happened with Anadarko. And, arguably could happen with some of these other pure plays.”
Aitken doesn’t think it’s likely the Permian Basin will see another $55 billion deal, but that doesn’t mean more multi-billion dollar buyouts aren’t on their way.