Did we overpay for PXD? Why, why not?
11 replies (most recent on top)
XOM never had 900k gross acres in the Permian. So XOM did NOT buy back most of the acreage. Some of that acreage was bought back, but most is new acreage that Sheffield bought since 2010 in multiple deals (Like Mesa).
XOM farmed down that acreage in 1990s (and kept an overriding royalty) on alot of it, so XOM got paid free and clear royalty profit with no investment (ie infinite return).
Considering we once owned a lot of the acreage we have bought back from XTO and now Pioneer I am going to say we overpaid. Chevron never sold out. Then we get beat up over our supposed high costs.
Did we overpay for XTO?
Did we overpay for Brazil?
Did we overpay...?
Yes, since we're buying back acreage we sold once.
Not for the short-term.
Isn't that all that counts?
BofA global research doesn’t think they overpaid.
Probably they already drilled all Tier 1 acreage
An example of how oil prices affect these transactions
Chevron acquired Noble for $5B in Jul 2020 when oil was around $42/BBL, which is roughly the market capitalization of $4B at that time
The same Noble's market capitalization was $28B in May 2014 when oil was around $100/BBL.
Now there are other factors that can influence stock price (eg. M&A), but for an O&G company, oil prices plays a large role.
https://www.macrotrends.net/stocks/delisted/NBL/noble-energy/market-cap#:~:text=Noble%20Energy%20market%20cap%20history,that%20date%20was%20%244.048B.
No. Upside potential isn’t uniform vs. downside risk. There’s more that isn’t just “increasing recovery through technology”. Also, this wasn’t evaluated based on PXD’s reserve assumptions. We’ve got 1200+ wells in the ground.
PXD's Wolfcamp D reserves are about as believable as David Scott's innocence
Yeah obviously. Hard to say by how much but those “reserves” depend on shale wells producing what PXD says they will…
Which never happens. Seriously go look at shale production forecasts in aggregate vs actual and it’s across the board.