Oil and gas producer Concho Resources Inc. has reported that will buy smaller RSP Permian Inc. in an all-stock deal valued at approximately USD $8 billion, making it one of the biggest producers in the Permian Basin.
Many energy companies, including Exxon and Chevron, have started projects in the Permian Basin to boost production because of its prolific resources and relatively cheap costs. Production there is expected to rise by 75,000 barrels per day to 3 million bpd by the end of March 2018.
The combined company, which will be owned 74.5 percent by Texas-based Concho, will have 27 rigs in the Permian region, which is currently at the middle of the American shale revolution.
Generally speaking, the oil industry recently has been discussing the benefits of merging resources in the busy Permian Basin as a way to reduce operating costs and increasing shareholder returns. The Concho-RSP deal will add about 92,000 net acres to Concho’s existing oil fields in the Permian Basin, increasing its total acreage to 640,000.
Image courtesy of Rigzone