In a notable move, Houston-based Battalion Oil announced on December 15 its plan to merge with Fury Resources in a $450 million deal. This merger aims to ramp up oil and gas production in the Permian Basin, particularly in its western Delaware sub-basin that straddles the border between southeast New Mexico and West Texas. Avid Mirman, Chairman of the Board, expressed optimism about the merger, emphasizing its potential to enhance financial returns by focusing on existing assets in the area.
Battalion CEO Matt Steele expressed the company’s ambition to become a dominant force in the Delaware Basin. Steele highlighted that the additional capital from the transaction would enable the full development of Battalion’s assets, setting the stage for the company’s, its investors’, and its employees’ success.
Following Battalion’s announcement, Vital Energy revealed plans on December 21 to acquire producing oil and gas assets in the Permian Basin from Henry Energy for approximately $55 million. This acquisition will add 45 wells to Vital’s portfolio, boosting production by about 1,400 barrels of oil per day. CEO Jason Pigott noted that this move would expand Vital’s operations in both the western Delaware and eastern Midland sub-basins, leveraging increased scale in the Permian to drive new efficiencies.
Despite these developments, the region faced a slight downturn in drilling activity and oil prices. New Mexico and Texas saw a reduction in drilling rigs, with the Permian Basin experiencing a drop in total rigs, as reported by Baker Hughes. Concurrently, U.S. oil prices dipped to around $75 per barrel.
Nevertheless, industry forecasts for 2024 are optimistic. The Energy Information Administration (EIA) predicts a growth in oil production in the Permian Basin, with expectations of reaching about 6 million barrels of oil per day (bopd) in January. This growth is not limited to oil, as natural gas production in the region is also set to rise significantly, outpacing other U.S. shale regions.
Fueling this high production, U.S. crude exports hit a record high in the first half of 2023, reaching about 4 million bopd. This marked a substantial increase from the previous year, reflecting the lifted ban on U.S. oil exports in 2015 and underscoring the country’s growing role as a major oil exporter.
As 2024 dawns, the Permian Basin stands at the forefront of the U.S. oil and gas industry, driven by strategic mergers, acquisitions, and a robust export market, setting the stage for a dynamic year ahead in energy production and development.
