Page 7 - NorthAmOil Week 40 2021

NorthAmOil COMMENTARY NorthAmOil

Pioneer Natural
Resources’ CEO,
Scott Sheffield, has
said his company will
not pursue further
consolidation.

said it expects the merger to save the combined DoublePoint Energy in May.
company about $100mn per year through oper- Last month, Pioneer’s CEO, Scott Sheffield,
ational efficiencies and cost-cutting. The com- said his company would not be engaging in any
pany’s assets amount to more than 700,000 acres further M&A activity. Speaking at the Barclays
(2,833 square km), with a production base of CEO Energy-Power Conference, he said he
around 605,000 barrels of oil equivalent per day expected a broader slowdown in US oil and gas
(boepd) as of the second quarter of 2021. consolidation, attributing this to factors includ-
Callon, for its part, raised its production ing a lack of cash and concerns about future
forecast for the third quarter of 2021, as well demand trends.
as the full year, after completing the $788mn Other operators that have made major acqui-
acquisition of the Primexx assets. The assets are sitions recently have also downplayed sugges-
located in the Permian’s Delaware sub-basin. In tions that they could pursue further deals.
its October 5 announcement about the comple- Some activity will still continue, though,
tion of the deal, Callon also said it had agreed to including among private equity firms that are
sell non-core acreage in Texas’ Eagle Ford shale seeking to sell off their oil and gas investments
play for roughly $100mn. That deal is set to close during a period of stronger oil prices. Last
in November. month, Enverus’ senior M&A analyst, Andrew Private equity
The company now anticipates producing Dittmar, was quoted as saying that while private
98,500-99,500 boepd in the third quarter, up equity had traditionally preferred cash, a new players have a
from its previous guidance of 95,500-97,500 willingness to accept equity had helped to drive role to play as
boepd. Its guidance for the full year has been a lot of deals forward.
updated to 94,500-95,500 boepd from 89,000- Private equity players have a role to play as buyers as well as
91,000 boepd previously, when accounting for buyers as well as sellers, and there are expecta-
both the Primexx acquisition and the Eagle Ford tions that they could become even more prom- sellers.
sale. inent if public companies come under further
pressure to stop investing in oil and gas on envi-
What next? ronmental concerns.
Some producers have made it clear that they This pressure, which is mounting as the
are still on the lookout for further acquisitions, energy transition accelerates, was also high-
but for others the priority is now to integrate lighted by Sheffield as a potential deterrent to
those assets that they have acquired over recent further M&A activity. Additionally, a strong
months. focus among operators on ESG issues could lead
The case of Pioneer Natural Resources, to under-investment, which could in turn drive
which played a prominent role in the wave of up oil and gas prices, he warned.
consolidation, illustrates this. Pioneer took Gas prices in particular have been rising to
over Parsley Energy at the start of the year in new highs in the weeks since Sheffield made his
a deal worth $7.6bn including debt, and fol- comments, and this may yet force producers to
lowed this up with its $6.4bn acquisition of rethink some of their plans.™

Week 40 07•October•2021 www. NEWSBASE .com P7