Texas on My Mind – Acquisition of Callon Petroleum Gives APA Much Deeper Roots

Permian this and Permian that. For several years now, acreage and production in that sprawling, crude-oil-focused shale play in West Texas and southeastern New Mexico have been at the center of so much M&A activity. And the deals keep coming! Just last week, APA Corp. — the international E&P formerly known as Apache — announced that it will be acquiring Callon Petroleum, which in recent years has become a Permian pure play with significant holdings in both the Delaware and Midland basins. In today’s RBN blog, we discuss the APA/Callon deal, the drivers behind it, and why the acquisition makes sense for both companies. 

The list of multibillion-dollar M&A deals involving assets in the U.S.’s dominant crude oil play continues to grow. Here’s just a sampling of the larger deals announced over the past couple of years:

• ConocoPhillips’s $13.3 billion acquisition of Concho Resources and $9.8 billion purchase of Shell’s Permian assets.
• Chevron’s $13 billion purchase of Noble Energy.
• Cabot Oil & Gas’s $9.3 billion buy of Cimarex Energy (the combined company is now known as Coterra Energy).
• Pioneer Natural Resources’ $7.6 billion acquisition of Parsley Energy and $6.4 billion purchase of DoublePoint Energy.
• Civitas Resources’ acquisition of Tap Rock Resources’ Delaware Basin assets and Hibernia Resources’ Midland Basin assets for a total of $4.7 billion.
• Permian Resources’ $4.5 billion buy of Earthstone Energy.
• Ovintiv’s purchase of “substantially all” of the Permian assets held by EnCap Investments’ Black Swan Oil & Gas, PetroLegacy Energy and Piedra Resources for just under $4.3 billion.
• Diamondback Energy’s acquisition of FireBird Energy and Lario Permian (a subsidiary of Lario Oil & Gas) for a total of $3.1 billion.

As it turned out, all that was just a teaser for two Permian-focused megadeals this past fall: ExxonMobil’s October announcement that it had agreed to acquire Pioneer Natural Resources for $64.5 billion and Occidental Petroleum’s December announcement that it will be buying CrownRock LP — a leading privately held producer in the Midland — for $12 billion. The Exxon/Pioneer deal holds the distinction of being the largest-ever upstream transaction in the U.S.