Bryan Sheffield isn’t worried about a land-price bubble in West Texas’s booming Permian Basin oil field.
Sheffield, chief executive of Austin-based Parsley Energy, just spent $2.8 billion on Permian land held by Fort Worth’s Double Eagle Energy. It was the second largest deal of the year so far, behind only Exxon Mobil’s $6.6 billion purchase of Bass family land in the Permian’s Delaware Basin.
Parsley paid about $37,000 an acre and Sheffield says he won’t pay more than $40,000 any time soon. But he argued that Permian sweet spots are so good they’ll make money at $60,000 an acre — which some have paid — as long as the companies get rigs up and running on the land within a few months of purchase.
Still, he warned, competition for services is now quickly tightening, and that will likely cut into profits. Hydraulic fracturing teams, drilling rigs and truck hauling crews are in such demand they’re firing clients who won’t pay higher prices, or skipping jobs to find higher-paying work, he said.
It’s almost like 2011 again, he said in an interview after speaking at the winter NAPE conference at the George R. Brown Convention Center in downtown Houston. As the shale revolution was booming, when Parsley was much smaller, he was bringing frack companies breakfast. He even took oil field service executives to a World Series game — Texas Rangers v. St. Louis Cardinals — in Arlington that year, just so he could get on top of their waiting list.
“It’s déjà vu all over again,” Sheffield said on Tuesday.
The Double Eagle deal was Parsley’s second of the year. The company spent $650 million in January for about 23,000 acres in the Delaware and Midland basins.
Parsley is done buying land for the year, Sheffield said. But he’s happy with the company’s purchases.
“We’re growing so fast,” he said. “I think we’re in the driver’s seat.”