“This Permian acquisition expands the scale of Maverick’s operations and provides high quality, oil-weighted drilling inventory,” Maverick CEO Chris Heinson said. “We expect to utilize our enhanced scale, operational track record, and conservative balance sheet to access capital markets for funding future acquisitions.”
ConocoPhillips, which spent $20 billion over the past two years to acquire Concho Resources and Shell’s Permian assets, is planning to divest $4 billion to $5 billion of its assets this year to streamline its portfolio and return more cash to shareholders. Most of Conoco’s asset sales are expected in the first half of this year, Conoco CEO Ryan Lance told analysts in November.
“When we did the first look at the portfolio primarily in the Permian, we think there's going to be some cleanup that we can do … and some outright sales,” Lance said at the time.
CONSOLIDATION: ConocoPhillips’ Permian deal tests industry focus on capital discipline
As oil producers consolidate operations and resources after the pandemic-driven downturn, companies are expected to divest non-core real estate, leading to more sales and acquisitions in the industry, said Andrew Dittmar, a director at Austin energy research firm Enverus.
“Big time corporate (mergers and acquisitions) often leads to a subsequent wave of asset deals as buyers prune their expanded portfolios,” Dittmar said last month. “There was a bit of this during 2021 with non-core asset sales by Pioneer and Diamondback Energy, another buyer from the 2020 merger wave. There should still be plenty of room to run for deals though and we anticipate this to drive a resurgence in mid-size, asset-level deal making.”
Lance echoed similar sentiments at Argus Media's crude summit in downtown Houston earlier this month.
“I think consolidation needs to occur (but) that doesn't mean the small independents disappear out of this business,” Lance said. “There's always going to be a business for those folks that are picking up assets from large, independent companies like mine or the integrated majors.”
Maverick plans to fund its purchase of Conoco’s assets through a $500 million reserve based loan provided by JPMorgan Chase Bank, Royal Bank of Canada, Citizens Bank, Keybank National Association and Keybanc Capital Markets. The private oil and natural gas producer has been shifting its portfolio to focus on Texas and Oklahoma after divesting its assets in California and Michigan.