Stop The Presses -- Damn The Torpedoes -- Full Speed Ahead -- CLR To Acquire Permian Assets -- November 3, 2021

Updates

Later, from twitter, 9:02 p.m. CT: link here. The CLR deal works if WTI goes to $150. Someone else said that; not me. Don't kill the messenger. 

Original Post

Link here.

CLR has gains for the day; dropped 6% on the news.

Nov 3 (Reuters) - U.S. oil and gas producer Continental Resources Inc is nearing a deal to acquire the Delaware Basin assets of peer Pioneer Natural Resources for more than $3 billion, people familiar with the matter said on Wednesday.

Continental would add to its existing operations in the Bakken of North Dakota and Oklahoma's SCOOP/STACK shale formations through the acquisition, which could be announced by the companies when they report quarterly earnings later on Wednesday, the sources said.

Reuters reported in September that Pioneer was seeking to sell the assets in a bid to streamline its business and reduce debt after two big acquisitions this year.

Let's see, let's say $25,000 / acre = $3 billion / $25,000 = 120,000 net acres. See below: did CLR pay $60,000 / net acre in the Permian?

CLR could have bought a lot of Bitcoin for $3 billion.  

 

PXD: says it expects a $1 billion pre-tax loss on this divestiture. This is sounding more and more like the OXY / Anadarko experience.

 

From July 25, 2021: 

• OXY:
• marketing 250,000 net acres in Delaware portion of the Permian;
• $550 million
• the company has targeted more than $2 billion from divestments in the first half of 2021

OXY / Anadarko: $40 billion

• 10,000 drilling sites

CLR / PXD Delaware: $3 billion

• 1,000 drilling sites

***************************************
3Q21 Earnings

Link here. 

From the press release:

• net income: $1.01 / share; $369.3 million net income; adjusted, $437.2 million; $1.20 EPS, adjusted;
• cash flow: $1.0 billion from operations
• highly accretive expansion into Permian Basin; see above; immediately additive to ECF (enterprise capital fund?) capacity; 
• "92,000 contiguous net leasehold acres and 50,000 net royalty acres"
• not sure if this is 142,000 acres or not; maybe someone explain the difference between "contiguous net leasehold acres" and "net royalty acres" but if bottom line is 50,000 net royalty acres:
• a total of 92,000 net leasehold acres of which 50,000 are currently net royalty acres?
  
• $3 billion / 92,000 = $32,608 / acre