You may not have heard too much from oil giant Exxon Mobil (XOM) over the past couple years but the company has, apparently, been quietly waiting out the US Shale debate and has now emerged from the shadows with a new—and very lucrative—deal worth upwards of $6.6 billion.
Indeed, Exxon will be pickup up various companies presently owned by the Bass family, of Fort Worth, TX; companies which have an estimated oil resource equivalent of approximately 3.4 billion. This transaction, thus, will double Exxon’s Permian Basin resources to the oil equivalent of six billion barrels.
For the acquisition, Exxon will pay $5.6 billion up front, in stock, with future contingent cash payments totaling an additional $1 billion (with the first payment coming in 2020 and the final payment in 2032). RBC Capital Markets has emerged to detail that the initial $5.6 billion in stock represents only about a 1.5 percent share count increase.
“This investment gives us an exceptional Delaware Basin position in a proven multi-stacked play that can generate attractive returns in a low-price environment,” explains Exxon Mobil CEO Darren Woods. “By utilizing ExxonMobil’s technological strength coupled with its unconventional development capabilities we can drill the longest lateral wells in the Permian Basin, reducing development costs and increasing reverse capture.”
Now, the companies within Bass Operating Co. (Bopco) will definitely add yet more diversity to Exxon’s unconventional liquids portfolio. Currently, the whole Bass operations currently produce more than 18,000 boe/d net, with 70 percent weighted to liquids. The deal, thus, includes roughly 250,000 acres in the Permian, alone, and most of this is contiguous and held-by-production within the New Mexico Deleware formation.
Woods goes on to say, “This acquisition strengthens ExxonMobil’s significant presence in the dominant U.S. growth area for onshore oil production.”
He also comments, “The highly contiguous position will provide significant cost advantages in developing 3.4 billion boe of resource, of which 75% is liquids. By utilizing ExxonMobil’s technological strength coupled with its unconventional development capabilities we can drill the longest lateral wells in the Permian Basin, reducing development costs and increasing reserve capture.”