The resurgence of the Permian has also affected merger and acquisition activity. This is a very hot play right now — so hot that some companies are buying into it for the first time, and another is coming back after a 20-year absence. Let’s look at some of the deals that have been announced over the past few weeks:
Regency Energy Partners LP (NYSE:RGP) purchased 5,600-mile gathering system from a jointly owned affiliate of Energy Transfer Equity, L.P. (NYSE:ETE) and Energy Transfer Partners LP (NYSE:ETP) for $1.5 billion. The deal also includes 500 Mmcf/d of processing facilities, two other facilities currently under construction.
Shell came back to the Permian after divesting its assets there in the mid-1990s. On Feb. 1, the company began operating the assets it acquired from Chesapeake Energy Corporation (NYSE:CHK) last September. Shell purchased 618,000 net acres from the debt-laden Chesapeake for $1.935 billion.
That is an awful lot of activity in a short period of time. Growing production and improved takeaway capacity will only encourage more deals in the future.
The combination of enhanced oil recovery techniques in the mature fields and horizontal drilling in others mean that production in the Permian will continue to climb in the years ahead, which means there may be significant upside to oil producers like Occidental Petroleum Corporation (NYSE:OXY), as well as midstream infrastructure companies.
The article 1 Crucial Development in the Permian Basin originally appeared on Fool.com.
Fool contributor Aimee Duffy has no position in any stocks mentioned. Click here to see her holdings and a short bio. If you have the energy, check out what she’s keeping an eye on by following her on Twitter, where she goes by @TMFDuffy.The Motley Fool recommends Magellan Midstream Partners and Range Resources and has options on Chesapeake Energy.
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