Despite the flashy deals currently zipping through the Permian, Energen Corp. (NYSE: EGN) plans to take in the scenery—and deal making—with both hands on the wheel.

The Birmingham, Ala.-based company is focusing on a conservative approach to A&D with smaller, strategic purchases while taking advantage of a “bulletproof” balance sheet to push the envelope with completion designs, said James McManus, Energen’s chairman, president and CEO.

“What we’ve turned to is more … let’s try to continue to trade and bolt-on around ourselves and that's been our approach,” McManus said during the company’s fourth-quarter earnings call.

Through Feb. 9, Energen has added roughly $50 million worth of Permian acreage in 2017. The acquisitions include 1,400 net acres, primarily in the Delaware Basin, for $32 million. The company also agreed to buy 640 net mineral acres in the basin for $18 million.

“We think we got really good acreage and we’re trying to make some value buys or we’re trying to buy something that … is as good as the best stuff that we’ve got,” McManus said.

Overall, the company has set a target of 10,000 acres in bolt-on acquisitions per year, he added.

In 2016, for instance, Energen added about 9,000 net acres in the Delaware and Midland basins for $120 million. In addition, the company invested about $11 million to acquire mineral acreage and spent roughly $17 million for expenses such as lease renewals.

Energen Permian Basin Asset Map

McManus said the company hasn’t entirely ruled out larger acquisitions—and acknowledged the company has been looking.

“There have been acquisitions where either we felt the price was too high or there have been acquisitions that we felt like the quality of the acreage itself was not as good as the quality of what we had in inventory. So we haven't been able to either be price competitive or we haven't thought we wanted to pursue it,” he said.

Energen holds about 299,914 gross (224,088 net) acres across the Permian, according to a January presentation. The company completed its transformation to a pure Permian operator after divesting its remaining San Juan Basin assets in 2016.

The company doesn’t budget for acquisitions, though Energen said it expects A&D spending to increase as it pursues bolt-on acreage.

In addition, McManus said Energen’s 121,663 gross (88,004 net) acreage position in the Central Basin Platform could serve as a “funder” for a larger acquisition. For now, the company has no plans to market the position.

“If you look at our balance sheet, we don't really need the cash, so it’s not something we're going to monetize unless we needed the cash for either [drilling] acceleration or we needed the cash to help fund something that we bought,” he said.

McManus noted that the acreage would also be worth more in a higher oil price environment but “there's just not a need to sell that asset.”

On Feb. 9, Energen reaffirmed its 2017 production growth of about 20%, with capex budgeted at $790 million. The company also disclosed results from its first “Generation 3” completions in the Midland’s Wolfcamp B.

Energen reported that its first two completions in the basin show average cumulative production exceeding a 1 million barrels of oil equivalent EUR type curve using a 7,500-ft lateral well through 90 days.

“We believe the implementation of this upsized completion design presents upside to the EGN production profile,” Gabriele Sorbara, senior equity analyst with The Williams Capital Group LP, in a Feb. 10 report.

In 2017, the company plans to drill 96 gross wells, complete 124 gross wells and exit the year with 33 gross drilled but uncompleted wells. All horizontal wells are scheduled to be completed with its new frack design.

As of year-end, pro forma for the $50 million in bolt-on acquisitions, Sorbara calculates Energen’s total liquidity at about $1.4 billion, consisting of $1.05 billion undrawn on its borrowing base and $336.1 million cash.

Emily Patsy can be reached at epatsy@hartenergy.com.