Fort Worth oil firm sells Midland Basin assets for $2.8 billion as Permian rush continues
Double Eagle Energy Permian LLC, the Fort Worth oil explorer founded by a retired NFL player and his high school buddy, is selling 71,000 acres in Texas' oil-rich Midland Basin for $2.8 billion.
The land is being sold to Parsley Energy, the Austin-based driller run by Southern Methodist University graduate Bryan Sheffield. He's been described as the oil patch's newest billionaire. He's also the son of Pioneer Natural Resources' executive board chairman Scott Sheffield.
The cash and stock deal, announced Tuesday, will bring Parsley's holdings in the Permian Basin to 227,000 acres.
"We are pleased to solidify Parsley's position as a leading Permian operator through our largest acquisition to date," said Sheffield in a statement. "We believe this transaction sets us apart from peer companies on the basis of the size and quality of our acreage position in what we consider the most desirable basin in the country."
The energy industry poured more than $28 billion into land acquisitions in West Texas last year, more than triple what they spent in 2015, according to Reuters. Already this year, oil giant Exxon Mobil struck a $6.6 billion dealand Houston's Noble Energy paid $2.7 billion for Clayton Williams Energy Inc.
The Permian Basin is a hot area for producers because they can make money at the current crude price of about $52-$53 per barrel. The region's selling points are its sprawling pipeline network, abundant labor and supplies, and warm winters that allow year-round work.
Double Eagle's co-CEOs, John Sellers and Cody Campbell, have made a fortune buying and selling Permian acreage starting in 2009. The company was reported to be considering an IPO last fall.
Sellers and Campbell said in a statement that Parsley was an attractive buyer to them because it grew its footprint "through the same types of creative transactions it took to build Double Eagle's portfolio."
Sellers and Campbell got into the oil business after the 2008 U.S. housing crash ended their separate careers as real estate developers, Reuters reported. Sellers had gone into real estate after college, and Campbell had done so in 2006 after a pectoral muscle tear cut short his 17-month career as an offensive lineman with the Indianapolis Colts of the National Football League.
In addition to the asset purchase, Parsley also said it will boost its capital spending this year to $1 billion to $1.15 billion. That's up from $750 million to $900 million.