Latest news with #PermianBasin
Yahoo
7 hours ago
- Business
- Yahoo
Global Upstream M&A Drops 34% as U.S. Activity Slumps
Mergers and acquisitions in the global upstream oil and gas sector clocked in at just over $80 billion in the first half of 2025, good for a 34% year-over-year decline amid volatile oil prices and tariff concerns by the Trump administration. According to Rystad Energy, M&A was particularly weak in the first quarter, with deal value totalling just $28 billion compared to $66 billion in the first quarter of 2024. This was largely as a result of lackluster activity in North America, with the region's share of global deal value dropping to 51% in the first half of the year, down from 71% in the first quarter. The slowdown in the U.S. M&A can largely be attributed to a dearth of opportunities in the Permian Basin, long considered North America's M&A hotspot. Consequently, E&P companies are increasingly turning elsewhere as the Permian cools and asset values skyrocket: back in May, EOG Resources (NYSE:EOG) acquired Utica heavyweight Encino Energy for $5.6 billion; Diversified Energy (NYSE:DEC) bought Maverick Natural Resources for nearly $1.3 billion while Citadel paid $1.2 billion for Paloma Natural Gas. Canada has, however, continued on its hot M&A streak, with upstream M&A deal value hitting $11.9 billion in H1 2025--nearly equal to the country's annual average over the past five years. Leading the charge was Whitecap Resources (OTCPK:WCPRF) acquisition of Veren for $15 billion, including net debt, as well as CNRL's purchase of Shell Plc's(NYSE:SHEL) stake in the Athabasca Oil Sands Project. Further, Strathcona Resources (OTCPK:STHRF) divested all its Montney assets and proposed a takeover of MEG Energy (OTCPK:MEGEF) in a deal that will turn it into a pure-play heavy oil North America, International M&A activity increased 37% year-on-year to $39.5 billion with a strong recovery in the second quarter overcoming a weak start to the year after deal values plunged nearly 60% Y/Y. Major transactions included ADNOC subsidiary XRG's bid for Australia's Santos Ltd (OTCPK:STOSF), accounting for nearly half of the total international deal value. A consortium led by ADNOC subsidiary XRG has made a $18.7 billion non-binding indicative offer to acquire Santos. The offer, valued at $5.76 per share, involves a potential scheme of arrangement for all of Santos' issued shares. The consortium includes Abu Dhabi Development Holding Company (ADQ) and Carlyle. Santos has granted XRG a six-week exclusive due diligence period to assess the proposal. Meanwhile, Italy's National Oil Company (NOC), Eni S.p.A. (NYSE:E) sold its upstream assets in Africa to giant oil and commodity trader, Vitol, for $1.65 billion; Norway's DNO ASA (OTCPK:DTNOF) acquired Sval Energi for $1.6 billion while Spain's Repsol (OTCQX:REPYY) and UK's Nego Energy's UK merged their North Sea upstream businesses to form Neo Next Energy. That said, a rumored-and-denied merger between BP Plc (NYSE:BP) and Shell (NYSE:SHEL) would no doubt seek to steal the M&A limelight, with deal value likely to approach $80 billion. Recent reports have emerged that Shell was considering a takeover of BP, potentially creating a European energy giant. However, Shell has explicitly stated it is not actively considering an offer for BP and has not held any talks with them regarding a possible acquisition. Shell has made a statement under Rule 2.8 of the UK Takeover Code, meaning the company is restricted from making an offer for BP for at least six months, except in specific circumstances. Interestingly, dealmaking in the natural gas sector has been robust, with deal values surging 30% in the first quarter. As Rystad notes, Big Oil companies are currently optimizing their portfolios to manage risk more effectively, a trend that is driving M&A in the gas sector. To wit, back in March, Chevron Corp. (NYSE:CVX) sold a 70% stake in its East Texas gas assets to TG Natural Resources for $525 million. The deal includes $75 million in cash and a $450 million capital carry to fund Chevron's Haynesville development. This transaction is part of Chevron's plan to divest $10-15 billion of assets by 2028. TGNR will become the majority owner of the East Texas gas assets and Chevron will retain a 30% non-operated interest and an overriding royalty interest. Similarly, Equinor (NYSE:EQNR) acquired a non-operating stake in EQT Corp's (NYSE:EQT) Marcellus assets, helping the Norwegian energy giant to gain exposure to robust gas production with minimal operational risks. 'These non-operated joint ventures allow majors and international oil companies to focus on their core operational portfolios while maintaining exposure to US shale gas, which has a positive outlook due to upcoming liquefied natural gas (LNG) projects and rising energy demand from data centers. Retaining non-operated stakes also allows majors to secure feed gas for planned off-grid power plants focused on artificial intelligence (AI),' noted Atul Raina, Rystad Energy's Vice President, Upstream M&A Research. By Alex Kimani for Read this article on
Yahoo
a day ago
- Business
- Yahoo
Why Permian Resources (PR) is a Good Investment for Dividend Income
Permian Resources Corporation (NYSE:PR) is included among the 12 Best Oil and Gas Dividend Stocks to Buy Now. A row of massive oil rigs in a desert landscape, against a setting sun. The strategic advantage of Permian Resources Corporation (NYSE:PR) lies in its low breakeven cost of $40 per barrel, which allows the company to remain profitable and pay dividends even during periods of commodity price volatility. The company announced a quarterly dividend of $0.15 per share in May and boasts an annual dividend yield of 4.85% as of the writing of this piece. In Q1 2025, Permian Resources Corporation (NYSE:PR) reported the highest free cash flow per share in the company's history at $0.54 per share, driven by lower per-unit cost and solid production performance. These numbers are expected to receive a boost as the oil and gas producer recently completed the acquisition of Delaware Basin leasehold and royalty interests from APA Corporation, adding approximately 12,000 Boe a day, 13,320 net acres, and 8,700 net royalty acres to its portfolio. Moreover, these acquired locations have a breakeven price of as low as $30 per barrel, allowing Permian resources to generate in excess of 5% free cash flow per share accretion in the near-term, midterm, and long-term. Artisan Partners stated the following regarding Permian Resources Corporation (NYSE:PR) in its Q1 2025 investor letter: 'We made one new purchase this quarter, adding Permian Resources Corporation (NYSE:PR), an independent oil and gas company. PR is focused solely on the Delaware Basin of West Texas and southwestern New Mexico—the most prolific oil-producing region in the US. The founders and co CEOs, who also have large ownership interests in the business, have sought to build a business that can produce substantial free cash flow, return capital to shareholders and generate attractive equity returns across varied commodities price environments. To achieve these goals, PR has pursued best-in-class operations and responsible capital stewardship by thoughtfully acquiring assets it believes are undervalued and divesting acreage it believes would be better in someone else's hands, while meaningfully returning capital to shareholders in the form of dividends. We always seek to align ourselves with shareholder-oriented management teams, but this is even more critical when investing in mid-sized energy companies given their dependence on the underlying commodity prices and minimal diversification by business and geography as well as the sector's general predilection for reinvesting capital for growth rather than returns. Shares were rangebound for much of 2024 as macro fears have weighed on oil prices and energy sector stocks, giving us an opportunity to purchase a strong operator at a favorable price.' Permian Resources Corporation (NYSE:PR) is an independent oil and natural gas company with operations focused in the Permian Basin, with assets concentrated in the core of the Delaware Basin. While we acknowledge the potential of PR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Nuclear Energy Stocks to Buy Right Now and The 5 Energy Stocks Billionaires are Quietly Piling Into. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Better Energy Stock: Diamondback Energy vs. Chevron
Key Points Chevron's integrated business and its rock-solid balance sheet help secure its dividend. Diamondback Energy is a well-run oil and gas company that offers good upside due to the potential for higher oil prices. Ultimately, the decision comes down to each individual's risk profile, but one stock stands out as a clear winner for passive income-seeking investors. 10 stocks we like better than Diamondback Energy › Comparing a pure-play exploration and production in the Permian Basin, Diamondback Energy (NASDAQ: FANG), with an integrated energy major, Chevron (NYSE: CVX), sheds light on many of the questions that oil and gas-focused investors face in the coming years. Let's take a look at which company might suit which type of investor better. The role of oil prices There's no getting around this question when investing in energy stocks, but the answers to it may not be immediately apparent. It's important to note that both these companies are very well run and pride themselves on a relatively low operating "break-even" oil price. This price represents the lowest price of oil needed to cover the cost of the company's operating expenses, existing wells (maintenance capital spending), and base dividend. Chevron's break-even price for oil is in the $30 per barrel range accoring to a Wood Mackenzie survey. Diamondback's management estimates its equivalent break-even price is $37 per barrel. That would appear to give Chevron the upper hand. However, consider that Chevron is an integrated major with substantial downstream and chemicals operations, which tend to perform well with a lower oil price; these factors are included in the break-even calculation. On the other hand, Diamondback is purely an exploration and production company. Moreover, Diamondback utilizes hedging to mitigate downside exposure to oil prices. Its hedges currently apply down to a price of oil of about $55 per barrel, meaning it has upside exposure to a price of oil above $55 per barrel. As such, you can think of Chevron's dividend (currently yielding 4.8%) as safe down to $30 per barrel, and Diamondback's base dividend (currently yielding 2.9%) as safe down to $37 per barrel. Consequently, if you are the type of investor primarily looking for yield and wanting to sleep safely at night, Chevron is the better investment for you. Don't forget the upside The flip side of the argument is that Diamondback has more exposure to a higher oil price, which is what one might expect, given that it's an exploration and production company. To provide some context for how this works, here's a look at Diamondback's management's estimated adjusted 2025 free cash flow (FCF) across a range of oil prices. For reference, Diamondback aims to return 50% of FCF to shareholders in the form of dividends (base and variable) and share buybacks. It has $1.845 billion remaining as part of a $6 billion share buyback authorization program. As of its first quarter, Diamondback made $829 million in share buybacks, equivalent to about $2.80 per share. Therefore, if management decided not to make any more buybacks and pay the remaining 50% in full-year FCF in dividends (base of $4, plus a variable dividend), then it could offer $5.20 in dividends, yielding 3.8%, assuming a price of oil of $60 a barrel. That theoretical figure rises $8.70 in dividends, yielding 6.4%, assuming a price of $80 a barrel. See what I mean by Diamondback having more upside exposure to the price of oil? Price of Oil per Barrel Free Cash Flow Free Cash Flow Per Share Free Cash Flow Yield (based on the current market price of Diamondback Energy of $136.5 a share) $50 per barrel $4.15 billion $14 10.3% $60 per barrel $4.85 billion $16 11.7% $70 per barrel $5.85 billion $20 14.7% $80 per barrel $6.85 billion $23 16.8% Data source: Diamondback Energy presentations. Table by author. In case you are wondering, based on these assumptions, the price of oil would have to be approximately $67 per barrel to get Diamondback's dividend yield to be equivalent to Chevron's current yield -- curiously enough, that's roughly the current price of oil now. Diamondback or Chevron? Ultimately, dividend-focused investors and those concerned about being overly exposed to oil prices will favor Chevron. In addition, Chevron's diversified operations (its production in the Permian is comparable to Diamondback's, but it has substantial other global assets, plus midstream and downstream operations) give it a place to focus its investment, even in the event of a sustained fall in oil prices. In contrast, other than reducing capital investment in response to lower prices (something Diamondback has already done this year), it's hard to think of what significant move a company like Diamondback can make. That said, many investors buy oil stocks precisely because they want exposure to the upside of oil, and Diamondback is a high-quality operator that has taken measures to limit its downside exposure. As such, nothing is stopping you from buying both stocks, as they are both attractive for passive income-seeking investors. Should you buy stock in Diamondback Energy right now? Before you buy stock in Diamondback Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Diamondback Energy wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy. Better Energy Stock: Diamondback Energy vs. Chevron was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Piper Sandler Downgrades Atlas Energy Solutions (AESI) Stock
Atlas Energy Solutions Inc. (NYSE:AESI) is one of the Piper Sandler downgraded the company's stock to 'Neutral' from 'Overweight' with an unchanged price target of $16. The firm expects a challenging backdrop for the US land, with the oil prices being affected by the tariffs and production hikes. Furthermore, it sees limited upside for Atlas Energy Solutions Inc. (NYSE:AESI)'s shares. Aerial view of oil rig in the Permian Basin, illustrating the expansive operations in West Texas and New Mexico. However, Q1 2025 was a healthy start for Atlas Energy Solutions Inc. (NYSE:AESI), considering the acquisition of Moser Energy Systems and the start-up of the Dune Express. The company believes that the acquisition of Moser offers a compelling platform for future growth, and it demonstrated optimism about scaling the business and implementing technologies to increase efficiencies. The addition of Moser's distributed power platform to Atlas Energy Solutions Inc. (NYSE:AESI)'s existing businesses will help develop an innovative, diversified energy solutions provider, possessing a leading portfolio of proppant, logistics, and distributed power solutions. Notably, the Moser asset base consists of a dynamic fleet of natural gas-powered generators, enhancing Atlas Energy Solutions Inc. (NYSE:AESI)'s current operations into production and distributed power end markets, aided by healthy macro tailwinds. Atlas Energy Solutions Inc. (NYSE:AESI) is a leading solutions provider to the energy industry. While we acknowledge the potential of AESI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
3 days ago
- Business
- Yahoo
Piper Sandler Downgrades Atlas Energy Solutions (AESI) Stock
Atlas Energy Solutions Inc. (NYSE:AESI) is one of the Piper Sandler downgraded the company's stock to 'Neutral' from 'Overweight' with an unchanged price target of $16. The firm expects a challenging backdrop for the US land, with the oil prices being affected by the tariffs and production hikes. Furthermore, it sees limited upside for Atlas Energy Solutions Inc. (NYSE:AESI)'s shares. Aerial view of oil rig in the Permian Basin, illustrating the expansive operations in West Texas and New Mexico. However, Q1 2025 was a healthy start for Atlas Energy Solutions Inc. (NYSE:AESI), considering the acquisition of Moser Energy Systems and the start-up of the Dune Express. The company believes that the acquisition of Moser offers a compelling platform for future growth, and it demonstrated optimism about scaling the business and implementing technologies to increase efficiencies. The addition of Moser's distributed power platform to Atlas Energy Solutions Inc. (NYSE:AESI)'s existing businesses will help develop an innovative, diversified energy solutions provider, possessing a leading portfolio of proppant, logistics, and distributed power solutions. Notably, the Moser asset base consists of a dynamic fleet of natural gas-powered generators, enhancing Atlas Energy Solutions Inc. (NYSE:AESI)'s current operations into production and distributed power end markets, aided by healthy macro tailwinds. Atlas Energy Solutions Inc. (NYSE:AESI) is a leading solutions provider to the energy industry. While we acknowledge the potential of AESI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
