Why oil giant Chevron will be buying Anadarko Petroleum for $33 billion

The 2014-2016 oil cost crash sparked a land rush inside Permian, where drillers can produce crude at low breakeven costs compared with various other regions. With the best land spoken for, energy companies are currently turning to mergers and also also also acquisitions to enhance their positions inside region underlying western Texas and also also also eastern fresh Mexico.

in which’s illustrated inside Chevron-Anadarko deal, which connects a large patch of Chevron’s Permian acreage in Culberson County, Texas, with Anadarko’s holdings in neighboring Reeves and also also also Loving counties. Wirth says Chevron plans to add more rigs, expand pad drilling and also also also introduce his company’s digital analysis to the Anadarko-held land.

“Clearly, a large driver of the deal will be Anadarko’s prized position inside Delaware Basin where Chevron increases its position by 240,000 net acres to over 1,400,000 net acres,” said Andrew Dittmar, a mergers and also also also acquisitions analyst at Drillinginfo. “The Delaware Basin currently provides the best well economics of any shale play inside country.”

According to sources, Occidental Petroleum also sought to snap up Anadarko. Occidental operates around the entire world, yet its U.S. operations are focused on the Permian — including inside Delaware Basin sub-region in which Chevron highlighted.

The Chevron deal will likely prompt oil majors to consider purchases of Permian players like Pioneer Natural Resources, EOG Resources and also also also even Occidental, said Dan Eberhart, CEO at oilfield services firm Canary.

“Chevron⁩ buying Anadarko will be the first in a series of takeovers as oil companies rush to scale to make shale work,” Eberhart said in an email. “This particular will be nearly always cheaper to drill for oil on Wall Street than inside oil patch.”