Come Back Song, Part 2 - Frenzy of Eagle Ford M&A Continues as E&Ps Enter, Expand or Exit

The wave of M&A activity in South Texas apparently hasn’t crested yet. Over the past couple months, Chesapeake Energy announced two deals totaling $2.825 billion that will almost complete its planned departure from the Eagle Ford — and signal UK-based INEOS’s arrival in the basin and a more than doubling of WildFire Energy’s production there. Just as important, Western Canada’s Baytex Energy a few days ago unveiled a $2.5 billion plan to acquire Ranger Oil, a pure-play Eagle Ford E&P, and thereby triple its South Texas production and gain its first operating capability in the U.S. And international interest in the basin doesn’t end there — Spanish energy giant Repsol, which had previously acquired the share of an Eagle Ford partnership held by Norway’s Equinor, recently bought basin assets held by Japan’s INPEX. (How’s that for multi-national M&A?) In today’s RBN blog, we discuss the latest round of E&P acquisitions and sales in South Texas, where production has been on the rebound.

Back in the first half of the 2010s, the Eagle Ford was in its glory, duking it out with the Permian and the offshore Gulf of Mexico for the #1 spot in crude oil production and with the then-preeminent Haynesville for top honors in natural gas output. But the mid-decade crash in oil and gas prices hit the Eagle Ford harder than any other U.S. production area and it didn’t rebound the way those other basins did, for a variety of reasons. Lately, however, M&A activity in the shale play has been surging, suggesting that the Eagle Ford may finally be on the verge of a serious, sustained comeback.

As we said last fall in Part 1, crude oil and natural gas production in the Eagle Ford peaked at about 1.7 MMb/d and 7.4 Bcf/d, respectively, in the mid-2010s, then sagged, bounced around a bit, and (like almost every basin) took a dive with COVID. Over the past few months, however, oil and gas production in South Texas have been showing new signs of life, averaging about 1.2 MMb/d and (a near-record) 7.3 Bcf/d, respectively, in February (blue and orange lines, respectively, in Figure 1 below). In that blog, we also discussed the slew of M&A activity occurring in South Texas, including Marathon Oil’s $3 billion purchase of Ensign Natural Resources’ Eagle Ford assets, Devon Energy’s $1.8 billion acquisition of Validus Energy, and a number of smaller deals by smaller players.