Permian Auction Doubles 2008 Record with near Billion-Dollar Sale
https://www.rigzone.com/news/wire/permian_auction_doubles_2008_record_with_near_billiondollar_sale-07-sep-2018-156868-article/September 07, 2018
The price to access unexplored shale assets on the New Mexico side of the Permian Basin soared to $95,001 an acre in a federal government auction, a record high for North America’s biggest oil field.
The state’s previous record was $40,001 an acre set in December, according to a statement yesterday by the U.S. Department of the Interior. Overall, the two-day auction saw bids on 142 parcels of land and raised $972 million, more than the whole of 2017 and double the 2008 record.
Federal Abstract Co., a firm in Santa Fe that bids on behalf of anonymous investors, was listed as the record bidder, according to the U.S. Bureau of Land Management. The company, which paid $387.4 million in total for rights to 17 pieces of land, didn’t immediately respond to a phone call seeking comment.
EOG Resources Inc., Devon Energy Corp., Exxon Mobil Corp. and Chevron Corp. would be “logical buyers†of the tracts because they own nearby drilling rights, Scott Hanold, an Austin-based analyst at RBC Capital Markets LLC, wrote in a note Friday. Contiguous leases are essential for drilling long, horizontal wells.
The auction provides a rare peek into how oil producers value drilling rights in the Permian, most of which is in Texas, where land and minerals are privately owned. Record prices show that despite a recent slowdown in activity due to pipeline shortages, explorers view the Permian’s stacked layers of oil-soaked rock as a unique long-term asset....
