$132M in Permian Basin oil and gas assets bought by Texas company. Region's growth picks up

An oil and gas company based in Austin, Texas sought to strengthen its Permian Basin presence, spending $132.5 million on lands and facilities already operated in the region.

Bringham Minerals announced Aug. 22 it planned to purchase the assets from Avant Natural Resources, including about 3,900 acres in the eastern Midland sub-basin with 233 wells expected to be developed in the next year in Midland and Martin counties.

The lands will be developed by major operators in the region Pioneer Natural Resources, ExxonMobil and Endeavor Energy Resources.

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Next year, the acquisition was expected to produce 750 to 950 barrels of oil equivalent per day at about 60 percent oil, per the announcement.

Bringham Chief Executive Officer Robert Roosa said the transaction continued the company’s efforts to consolidate oil and gas assets in the region – the U.S.’ busiest onshore oil production region – and generate partnerships with some of the world’s largest energy companies.

“Our continued success consolidating core minerals is clearly demonstrated by our largest acquisition to date,” Roosa said.

“I personally view this acquisition as the highest quality Midland Basin package we’ve evaluated to date given both the diversification across two of the most prolific geologic counties in the lower 48 and the high-quality operator composition.”

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Bringham’s acquisition was followed by the Aug. 24 closure of a Permian Basin-focused merger of an oil and gas midstream company, as Diamondback Energy bought out and absorbed its subsidiary Rattler Midstream in a deal that analysts valued at about $575 million.

The deal meant Diamondback acquired all of Rattler’s assets not already owned by the parent company, and the subsidiary would no longer be listed as a publicly traded company.

Diamondback CEO Travis Stice said the merger was warranted following the COVID-19 pandemic that stymied fuel demand and let to a plumet of oil prices below $0 a barrel for the first time in history.

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Since the pandemic and amid the market’s recovery energy companies sought to consolidate their assets, focusing transactions on existing resources and mergers.

“The energy landscape has transformed dramatically since Rattler was taken public in 2019, and we believe this agreement to merge companies is in the best interests of both Diamondback and Rattler stakeholders,” Stice said when the Diamondback-Rattler merger was announced in May.

“This merger will allow both companies to benefit from the simplicity and scale of the combined entity going forward.”

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Increased market activity followed a heightened oil price environment, as the price per barrel of domestic crude climbed above pre-pandemic levels, spending the spring and summer in the triple digits and dropping slightly in recent weeks on fears of COVID-19 resurgence and increased supply.

The price of oil was $95 a barrel as of Monday, per the Chicago Mercentile Exchange, marking a climb from the lowest price of the summer $86 a barrel reported Aug. 16.

Higher prices meant more drilling for oil and gas throughout the in the Permian Basin, an increased the need to manage the resulting wastewater, known as “produced water” in the industry.

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Such water is brought to the surface with crude oil and natural gas, high in brine and chemicals and toxic for human consumption.

Traditionally, produced water was pumped back underground into rock formations from where it came from, and recently was treated for reuse in subsequent extraction operations.

Either way, the water needs to be moved from where it is produced to where it is disposed of, and increased fossil fuel operations in the Permian Basin brought growth in infrastructure to handle the wastewater.

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Palisades Pipeline announced an open season for its Rail Runner Produced Water Gathering system in the northern Delaware sub-basin on the western side of the Permian, allowing operators to reserve capacity for wastewater generated during operations.

The system will transport produced water from the Delaware Basin, one of the Permian’s most active regions, to saltwater disposal wells and reuse facilities in Winkler County, Texas.

The pipeline moves water about 97 miles for disposal or recycling, with an approved  capacity of 500,000 barrels per day, from Lovington to Monahans, Texas.

The line presently had a capacity of about 150,000 barrels per day, but will be expanded as it goes into service, the company said.

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.