'A Renewed Look': Central Basin Platform's Old Rock Gains New Interest
As majors prune their portfolios to sell non-core assets, M&A activity is heating up on the Permian’s Central Basin Platform and Northwest Shelf—and Ring Energy hopes to be a buyer.
Chris
Mathews
Hart Energy
Classic rock is making a comeback.
The Permian’s Midland and Delaware basins have attracted hundreds of billions of M&A dollars in the past two years. Now, operators are paying up for legacy conventional assets on the Permian’s Central Basin Platform.
As producers scour the prolific Permian for drilling locations, some say that the Central Basin Platform holds horizontal upside that’s long been overlooked.
Of course, oil isn’t hard to find on the platform. Some of the Permian Basin’s earliest and most legendary oil discoveries were made there.
Vertical production from the platform dates to the 1920s. The massive Wasson field, in Yoakum and Gaines counties, Texas, was discovered in 1937.
Other major discoveries on the platform included the Goldsmith (1935), Slaughter (1937) and Seminole (1936) fields.
Today, the platform is getting “a renewed look” as producers search for cash flow-boosting production and new drilling locations, said Paul McKinney, chairman and CEO of Ring Energy.
“The best place to find oil oftentimes is where you’ve already found it,” McKinney said at Hart Energy’s A&D Strategies and Opportunities Conference on Oct. 23.
Woodlands, Texas-based Ring has been one of the few publics drilling horizontal San Andres wells on its Central Basin Platform acreage—primarily in Andrews, Gaines, Crane, Ector, Winkler and Ward counties, Texas.
Ring also has a Yoakum County position in the Northwest Shelf, a formation spanning the northern reaches of the Delaware Basin. Riley Exploration Permian (Riley Permian) is the other notable public E&P playing on the Northwest Shelf.
A 2018 map of the major structural and tectonic features in the Permian Basin region. (Source: EIA, U.S. Geological Survey data)
When Paul McKinney became CEO of Ring in October 2020, the Central Basin Platform and Northwest Shelf were “basically dominated by private companies,” he said.
“Up until this summer, the Central Basin Platform and the southern part of the Shelf has been basically left for us to acquire and grow in,” McKinney said.
Ring Energy has grown its position in the Central Basin Platform and Northwest Shelf through M&A transactions in 2019, 2022 and 2023. (Source: Ring investor presentation)
But dealmaking activity on the platform is starting to heat up once again.
APA Corp., parent company of Apache, in September announced a $950 million sale of conventional assets on the Central Basin Platform and Northwest Shelf to an undisclosed private buyer. The divested assets had estimated net production averaging 21,000 boe/d (57% oil).
The non-core asset sale came after APA closed a $4.5 billion acquisition of Callon Petroleum, deepening Apache’s portfolio in the core of the Midland and Delaware shale plays.
Exxon closed its own $60 billion acquisition of Midland Basin giant Pioneer Natural Resources earlier this year.
As public E&Ps prioritize investment in the Midland and Delaware basins, experts think the market will see more non-core asset sales on the platform and the shelf.
“I believe there are more assets on the Central Basin Platform and the southern part of the shelf that are going to hit the market in the future,” McKinney said. “We’re very interested in those assets.”
Each of those companies have engaged in large-scale M&A over the past year and are looking at non-core asset sales to reduce debt:
Chevron is working through a blockbuster $55 billion acquisition of Hess Corp., with most of the deal’s value attributed to Hess’ ownership stake in the Stabroek Block offshore Guyana;
Ring estimates that gross production from operators on the Central Basin Platform and Northwest Shelf averages 480,000 boe/d (71% oil), citing Enverus Intelligence Research data.
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