Only the Oklahoma Stack Play seems to rival the interest shown by investors and E&Ps—not to mention the money—spent on the Delaware Basin in 2016.

The Stack is one of the most enticing places to drill outside of the Delaware. But unlike the holy grail that is Permian acreage, the days of deal making in the Stack are numbered—perhaps in the single digits.

Lucrative areas in the Stack’s 75 miles of territory have been snatched up by large public companies. Although, after so much large-scale A&D activity Stack acquisitions may be nearing a stopping point, at least until the next discovery.

The most recent notable deal in the Stack was a mid-November transaction by a gold royalty company, which bought mineral rights in Blaine and Kingfisher counties, Okla., for $100 million. Before that, Jones Energy Inc. (NYSE: JONE) purchased Canadian and Grady counties, Okla., acreage for $137 million in August.

The five largest companies in the Stack have secured sizeable positions, with leasehold encompassing about 1.2 million net acres worth roughly $40 billion, Capital One Securities energy analyst Richard Tullis told Hart Energy.

“It is fairly landlocked,” Tullis said. “The land grab happened pretty quickly here. Companies got up to scale pretty fast. There’s not a whole lot more left to grab.”

“There are some private companies that operate that may or may not sell a portion of their acreage down the road,” he said. “But beyond that it would have to be swapping and things like that.”

Some of the private companies with operations in the Stack include:

  • Alta Mesa Holdings LP;
  • Chaparral Energy Inc.;
  • Citizen Energy LLC;
  • Comanche Exploration Co. LLC;
  • Council Oak Resources LLC;
  • Hinkle Oil and Gas Inc.;
  • Kirkpatrick Oil Co. Inc.; and
  • Tapstone Energy.

However, powerhouse companies currently rule the Stack with their massive acreage and robust balance sheets.

Capital One Securities hosted a Scoop/Stack conference in New York on Nov. 29, inviting the play’s major E&Ps. Tullis came away realizing just how much cooperation he’s seeing between the usually competitive E&Ps.

An A&D détente seems to have naturally settled in the Stack as so many of the companies “are in each other’s wells so they have access to the data already,” he said.

Companies are sharing information and working together because overlapping positions require access to one another’s well data.

The largest E&Ps in the play have showed a “willingness to swap in order to drill longer laterals,” he said. “If you can drill a longer lateral you probably will, simply because it generally results in better economics. It seems like there’s a good bit of that going on.”

Some of those connections are, indeed, tightly bound.

Consider Devon Energy Corp.’s (NYSE: DVN) $1.9 billion purchase of Felix Energy in December 2015.

Tullis said that at a conference shortly after the deal’s announcement, Newfield Exploration Co. (NYSE: NFX) was able to show how many of Felix’s wells they held interests in.

“It basically showed there’s a lot of overlap between these companies. They’re in a lot of each other’s density pilots, too,” he said. “They get to learn from that data and test in the other formations, so there’s a whole lot of just sharing going on, it seems.”

In a February presentation, Newfield said that about 50% of Devon’s acquisition overlapped its acreage.

Tullis expects the cooperation to continue with transactions taking the form of acreage exchanges to firm up areas where E&Ps “would like to drill longer laterals than they would naturally be able to do.”

The Stack is the second most active area among shale plays in terms of rigs. It also offers superior economics in the Meramec Formation compared to the Scoop , Tullis said.

In addition, the Stack should compete well for capital, even for companies that have acreage in both plays.

In some areas, the Stack can stand toe-to-toe with the Delaware Wolfcamp, Midland Spraberry, as well as the Bakken and Eagle Ford Shale.

“It’s certainly going to get its share of capex,” Tullis said.

But joint ventures and areas of mutual interest are probably a long shot for now.

“All of them have pretty solid balance sheets. They’re able to scale up if the situation warrants,” Tullis said. “It seems like what they’re doing right now is working pretty well. At this time, they’ll probably stick with what they have.”

Large buyouts are also unlikely. As the play is developed, companies don’t want seller’s remorse that they sold too soon and left value on the table.

“Everybody’s still trying to figure out what they have,” he said, “and what the potential is.”

Darren Barbee can be reached at dbarbee@hartenergy.com.