This Oil Giant Could Win Sweepstakes For Coveted Permian Basin Land

Royal Dutch Shell (RDSA) could be set to beat rivals Exxon Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP) in the race to buy a prime Permian Basin acreage holder.

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The British-Dutch oil major is in pole position to snap up privately held Endeavor Energy Resources, a deal valued at around $ 8 billion, sources told Bloomberg.

However, this is roughly half of the $ 15 billion the Texas oil producer had initially been expected to sell for. The reason is because Endeavor founder Autry Stephens wants to retain a large quantity of its mineral rights, or ownership of untapped oil, which would entitle him to royalties when drilled, according to Bloomberg.

Exxon Mobil, Chevron and ConocoPhillips had weighed bids for the firm, but are said to have lost interest, at least for now.

The companies were interested in Endeavor as it has 329,000 net acres in the prolific Permian Basin, with just 2% of its holdings developed so far.

Discussions with Shell are not at an advanced stage. And Endeavor could still decide to remain independent, or could press ahead with plans for a 2019 IPO.

With U.S. crude oil prices plunging 7.3% to $ 46.24 a barrel Thursday.

Royal Dutch Shell shares were down 1.2% on the stock market today. Exxon stock fell 2.4%, Chevron stock slipped 2.3%, and ConocoPhillips stock eased 1.8%.

Oil Majors Expand In Permian Basin

Oil majors have been expanding their operations in the Permian Basin in recent years in an effort to get more contiguous acreage as well laterals become longer.

Earlier this year, Diamondback Energy (FANG) agreed to buy Energen in a deal worth $ 9.2 billion, and BP (BP) reached a $ 10.5 billion deal to acquire BHP Billiton‘s (BHP) Eagle Ford, Haynesville and Permian Basin shale assets.

In March, Concho Resources (CXO) agreed to buy RSP Permian for $ 9.2 billion.

Finally, last month Cimarex Energy (XEC) announced it will expand its acreage in the Permian Basin by snapping up Resolute Energy (REN) for $ 1.6 billion.

The deal will add 35,000 barrels of oil equivalent per day to Cimarex production. It’s expected to close by the end of Q1.

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