3 Min Read
(Reuters) - Parsley Energy Inc (PE.N) said on Tuesday it would buy certain assets in the oil-rich Permian Basin for about $2.8 billion from Double Eagle Energy Permian LLC, its second deal in the largest U.S. oil patch in less than a month.
The energy industry overall poured more than $28 billion into land acquisitions in the Permian Basin of West Texas last year, more than triple what they spent in 2015.
Permian Basin producers make money at the current crude price CLc1 of about $52-$53 per barrel because of the region's sprawling pipeline network, abundant labor and supplies, and warm winters that allow year-round work. Double Eagle and its predecessor companies have made a fortune buying and selling Permian acreage starting in 2009.
Parsley said the deal, which includes undeveloped acreage and producing oil and gas properties, would add about 71,000 net acres to its acreage in the Midland Basin, bringing its total acreage in the Permian Basin to about 227,000 acres.
The oil producer's shares were down nearly 4 percent in after-hours traded, recovering somewhat from a drop of more than 7 percent, after the company said it would sell stock to fund the acquisition.
Parsley said on Jan. 10 that it would buy acreage in the Permian Basin for about $607 million and said on Tuesday it would increase its activity in the region and raised its production forecast and capital budget for 2017.
Parsley hiked its 2017 capital budget to $1 billion to $1.15 billion from $750 million to $900 million.
It expects full-year production of 62,000-68,000 barrels of oil-equivalent per day (boed), up from its previous forecast of 57,000-63,000 boed.
The company estimated it produced 38,100-38,300 boed in 2016 and had total development expenditures of $493-$499 million, within the estimated production and spending ranges it gave on Jan. 10.
Parsley said it intends to finance the cash portion of the latest acquisition through an offering of 36 million shares and debt.
Reporting by John Benny in Bengaluru; Editing by Maju Samuel