AUSTIN, Texas—Private equity (PE) was largely the engine that made the Delaware Basin run, and for the most part, it got extremely good mileage.
The time for a tune-up is coming, though.
In the pre-Permian land rush, PE-backed teams bought acreage for $4,000 an acre and flipped it later for up to 10 times that amount as large E&Ps hunted for acreage. Many of the Delaware acquisitions in 2016 and early 2017 have featured public companies purchasing PE-backed management teams.
With their billion-dollar bankrolls, PE executives are akin to talent scouts. The deals they’ve generated in the Delaware and Scoop/Stack have come from an ability to ferret out bargain acreage while managing a bullpen of ace oil and gas operators.
Spotting a good deal is increasingly important as the industry begins a gradual A&D shift from the hottest plays. One opportunity: large companies are beginning to dispose legacy assets once thought untouchable. And pockets of popular basins may yet have secrets to yield.