Houston oil companies reignite flame with Permian

Confidence among companies in the oil space has led to a surge in deals and organic investment in the Permian Basin in recent months. And while the announcements around these deals and investments have started hitting the public eye especially since the beginning of the year, the genesis of that activity is actually from several months earlier.

“If you go back and you look at the overall M&A environment, what you’ve seen is this overall increase in bullishness really started germinating early on in the third quarter of last year,” said Doug Meier, who leads PricewaterhouseCoopers’ US oil and gas deals division from Houston. “

The animal spirit started to be rekindled in that third quarter, then you start to see deals announced, like we have, over the beginning of the year.”

The recent announcements are the first public visibility of processes that started months before as a crowd of factors supported a growing feeling that the end of the oil downturn is in sight.

Unsurprisingly, a lot of that activity is centred around the Permian Basin. “The Permian has been hot, not only in the second half of the year, but, relatively speaking, before that as well,” Meier said.

That’s being driven by a few factors. For one, the basin is well known as a geologically high-quality place to produce. Also, productivity enhancements have driven to profitably environment.

And finally, the basin is well connected to consumption and storage hubs by well-established pipeline infrastructure.

The Woodlands-based Anadarko Petroleum Corp has a massive development in the Permian right now and in recent weeks has started moving the first of an eventual 200 or so employees to a temporary office in Midland in support of those operations. The company has already started looking for more permanent space in the city, which is the biggest hub for outbound crude coming from the Permian.

Anadarko’s position there represents “probably one of the largest greenfield developments that are likely to be seen in the careers of most engineers and other petrol professionals,” CEO Al Walker said on the company’s fourth-quarter earnings call.

[Joshua Mann — Houston Business Journal] the break-even prices low enough produce oil at the current price