An anonymous tattletale reports that yet another big shale cat is on the Permian Prowl. Without spilling the beans of the forthcoming mega deal with ExxonMobil, Pioneer Resources CEO Scott Sheffield in August alerted analysts during an earnings call to a tidal wave a-comin’ in the shale oil patch, which he coined “extreme consolidation.” Now, two months and a $60 billion deal later, the flood gates appear to be opening.
Reese Energy Consulting today is following the latest rumblings of potential mergers this time from Okla. City-based Devon Energy, which is said to be weighing candidates to scale up its shale resources. Devon operates in the Permian Delaware (400,000 net acres; 420 MBOED (50% oil) in 2Q), Eagle Ford, Anadarko, Powder River, and Bakken. Permian production is by far its largest revenue driver.
So, the question is: Which of its shale resources is Devon looking to build on—or is it all of them? According to the tattletale, Marathon Oil and CrownQuest are on Devon’s homework list. Let’s compare their goodies.
Houston-based Marathon shares similar basins with Devon (Permian, Eagle Ford, Anadarko, Bakken) but with an international kicker, Equatorial Guinea. From a market value size, it’s about half of Devon’s $32 billion. Marathon operates 290,000 acres also in the Delaware, reporting in 2Q a surprising 40 MBOED (50% oil). Midland, Texas-based CrownQuest, on the other hand, is a pure-play Permian cat with 86,000 acres in the Northern Midland, 112 MBPD in production, and entertaining buy offers at the $10+ billion mark.