Parsley Energy ‘on tear’; will spend $2.8 billion on Permian land

A well is drilled at an Apache Energy site in the Permian Basin in Midland in 2012. Jim Wilson/The New York Times

Parsley Energy is buying rights to undeveloped acres in the heart of West Texas’ Permian Basin from Double Eagle Energy for $2.8 billion, continuing a run of high-priced acquisitions in the area.

It is the 10th large purchase in the basin announced by Austin-based Parsley and will add 71,000 net acres to the company’s Midland portfolio, bringing its total Permian acreage to 227,000, one of the largest holdings by independent production companies in the basin.

“It’s really been remarkable what Parsley’s been able to do,” said Jackson Sandeen, research firm Wood Mackenzie’s chief Permian Basin analyst. “The company’s been on a tear.”

The purchase includes acres in six Permian counties for about $37,000 an acre, a price at the upper end of recent averages.

This year is shaping up to be hotter than last in the basin. In 2016, companies cut more than $24 billion in Permian mergers and acquisitions, “a huge year,” said Sandeen. But companies have already spent half of that so far this year.

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And, since the start of last year, no company has made more Permian purchases than Parsley, Sandeen said. The company also spent more money in the basin than anyone except Exxon Mobil, which announced last month the purchase of Bass family oil land for about $6.6 billion.

Parsley said the new acres add 23 drilled but uncompleted wells, 3,300 horizontal drilling locations, and about 3,600 barrels of oil and gas per day.

The company is paying half in cash and half in stock.

Double Eagle, based in Fort Worth, was considering going public. The news of the Parsley buy, released late Tuesday, took analysts by surprise.

The sale is scheduled to close by April 20.