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November 5, 2021: others are confused also; see twitter $CLR. However, it appears my calculations are similar to others.
Idle "back-of-the-envelope" calculations regarding CLR's recent acquisition of PXD Delaware Basin acres. This is for my use only and anyone who wants to weigh in. Do not quote me on any of this. If this is important to you, go to the source and run your own numbers .
I'm still trying to figure out how many acres CLR acquired in the Permian. Usually, we are simply told the number of acquired net acres, but in this acquisition, according to the graphic below, CLR said:
- 92,000 net leasehold acres,
- 50,000 net royalty acres.
Is the 50,000 net acres part of the 90,000 leasehold net acres, or did CLR acquire 140,000 net acres in the Permian?
It seems like a simple question to answer but I really don't know.
No one else does it this way, but I've done this from the beginning. I know it makes no sense, but it helps me put the Bakken into perspective in a "funny" sort of way. I simply take the total purchase price divided by the total number of net acres acquired to determine $ / net acre.
The Permian Purchase --slide 5 in corporate presentation, November, 2021:
From the slides and my arithmetic:
Proved Developed Producing reserves are defined as “the estimated remaining quantities of oil and gas anticipated to be economically producible, as of a given date, by application of development projects to known accumulations under existing economic and operating conditions.”
- transaction price: $3.250 billion
- PDP (footnote 7) as % of transaction price: 75%
- $ / net acre (footnote 8)
- 0.25 * $3.250 billion = $0.8125 billion = $812,500,000
- $812,500,000 / $8,800
- 92,330 acres
- (7): per historical 3-stream reporting. Includes PDP and anticipated volumes from wells in progress expected to be on line in 1Q22
- (8) adjusted value derived from purchase press less PDP value
Whoo-hoo! This method suggests 92,330 net Permian acres were acquired by CLR for $3.25 billion. This is almost the exact number in the presentation: "92K net leasehold acres."
Now, back to the original "funny" way of determining value, dividing total purchase price by total net mineral acres:
- $3.25 billion / 92,000 net acres = $35,326 / per acre which seems in line with other acquisitions I've seen in the Permian.
Another standard way to determine valuation / pricing is to calculate price per flowing boepd. Commonly, $20,000 to $40,000 / boepd is considered standard for determining value of mineral acres.
The slide shows 55,000 boepd.
$3.25 billion / 55,000 boepd = $59,090 per flowing boepd at time of purchase.
This is in line with another individual who came up with "$60,000 / flowing boepd" which was posted at twitter. If I find that tweet again, I will link it.
The numbers all seem to be in line with what I've seen before for the Permian.
I will be thrilled if anyone who understand the finances of the deal as released by CLR weighs in on this.
I have no dog in this fight. I'm just trying to get some idea of what this part of the Delaware Basin in the Permian is worth, and how it compares to the Bakken.