RSP Permian Acquires Midland Basin Properties, as Permian Rigs Stay Steady in Summer

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Researched by Industrial Info Resources (Sugar Land, Texas)--RSP Permian Incorporated (NYSE:RSPP) (Dallas, Texas), an independent oil & gas company, closed several bolt-on acquisitions in the Midland Basin, which is its major operating area, for about $274 million. The company estimates it has picked up more than 85 million barrels of oil equivalent from the acquisitions. RSP is not the only company to weather the weak commodity-price environment via the (relatively) resilient area.

Bolt-on acquisitions occur when a company, backed by private equity, acquires a smaller entity to enhance its value. The acquisitions in the Midland Basin include 162 net horizontal drilling locations in five zones: Middle Spraberry, Lower Spraberry, Wolfcamp A, Wolfcamp B and Wolfcamp D (also called Cline). RSP will fully operate the acquired properties.

As part of its North American Oil & Gas Production Project Database, Industrial Info is tracking RSP Permian's 2015 and 2016 drilling programs, each valued at $24 million, in the Spanish Trail Lease of the Midland Basin's Spraberry Trend. Sidewinder Drilling (Houston, Texas) is serving as contractor.

RSP focuses on acquiring, exploring and developing unconventional oil and liquids-rich natural gas reserves in the Midland Basin, which forms the eastern portion of the Permian Basin, the most active U.S. oil province. The Permian is located in western Texas and southeastern New Mexico, with the Midland Basin entirely in Texas.

Permian Sees Uptick in Activity, but Less than in 2014
Drilling has picked up in the Permian, despite weak commodity prices, as indicated by a steady increase in rigs throughout most of the summer. However, the total rig count in the Permian Basin on August 21 stood at 252, compared with 552 on the same date in 2014.

Industrial Info is tracking more than $1.26 billion in Permian Basin drilling projects. Among the largest are XTO Energy Incorporated's (Fort Worth, Texas) 2014-15 and 2015-16 programs in the Seraphina Lease, respectively valued at $36 million and $30 million; and Concho Resources Incorporated's (NYSE:CXO) (Houston) 2015 and 2016 programs in the Sallie B Lease, each valued at $30 million. Both leases are in the Spraberry Trend.

XTO Energy is a subsidiary of Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) and manages the corporation's oil & gas portfolio. Earlier this month, ExxonMobil executed two agreements to obtain horizontal development rights in 48,000 acres of the Midland Basin; last year, the corporation added to its acreage through a pair of deals with LINN Energy LLC (NASDAQ:LINE) (Houston). All in all, ExxonMobil has executed five agreements in the Midland Basin since January 2014, providing the company with more than 135,000 operated net acres.

XTO currently operates 11 horizontal and four vertical rigs across more than 1.5 million net acres of leasehold in the Permian Basin, with net oil-equivalent production exceeding 115,000 barrels per day, according to ExxonMobil.

Concho currently has two horizontal rigs in the Midland Basin and 12 horizontal rigs in the Delaware Basin, which is the western portion of the Permian Basin. The Delaware total is down from a peak of 25 horizontal rigs in the fourth quarter of 2014.

Pioneer Energy Services (NYSE:PES) (San Antonio, Texas) is serving as XTO's drilling contractor for the Seraphina Lease. CanElson Drilling (Calgary, Alberta) and Ensign Energy Services Incorporated (Calgary) are serving as Concho's drilling contractors for the Sallie B Lease.

For information on related projects, see August 21, 2015, article - Plains All American Wraps Up Latest in String of New Permian Basin Assets.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.