DALLAS—There are a lot of big deals out there on the A&D Market as the price of oil remains on the uptick, but buyers are choosing to practice capital discipline, said RBC Richardson Barr managing director Craig Lande.

Lande, of course, wants the public E&Ps to return to the buyside, where they usually dominate. But that isn’t what the market is trending toward these days.

Instead of taking advantage of what would normally be a bull market, public E&Ps are falling on the side of responsibility and remaining primarily in the sideline in this seemingly robust time.

“[This year] oil hit $70 and you think people should be doing cartwheels to think the A&D market is incredibly robust like it was in 2016,” Lande said May 7 during the Energy Capital Conference hosted by Oil and Gas Investor. “In 2016 people were making the $40,000-acre acquisitions and getting rewarded for it.

“It’s really interesting to have such a more constructive oil price yet the [A&D] market is so much softer.”

The way oil prices are rising, spending and acquiring assets will likely yield great profits in the long run but that isn’t the approach being taken in the open market right now. Lande said the public E&P state of mind at this point is to protect the balance sheet, live within the cash flow and stop acquiring and start executing.

“That’s painful for someone like me to say that relies on the publics to buy,” he said. “But that really is the case right now.”

Private equity is where the majority of the buying is being done right now. In 2010 private equity was roughly 25% of the A&D market but now PE is almost half the market.

“I rely and sellers rely right now on private equity as buyers,” he said.

Currently PE is buying 26% of the conventional oil and gas, 13% Eagle Ford, 10%, Scoop/Stack, 8% Appalachia, 8% Haynesville and 8% Midland.

While Lande says conventional oil and gas may not be very sexy but if PE companies buy behind majors like ExxonMobil Corp., Chevron Corp. and Royal Dutch Shell Plc there is a chance the asset has been neglected and it has been underexploited.

“It’s probably tens if not hundreds of thousands of acres of are HBP because there is no drilling commitment which is really nice to hear right now for private equity,” he said. “And you are probably going to be able to cut cost 20 to 30% from Day 1.

“So you hope you find some other things along the way.”

This has led to PE buying PE which use to be taboo. But that has been going on for several years and is to the point where it’s structural, Lande said.

Back in 2010, 2011 and 2016 you saw about 5 to 6% of the deals being PE buying PE. But just five months into this year you see 17% of the deals being PE buying PE.

Lande said a lot of that has to do with firms coming in with some newer technological approaches.

“You are seeing a lot more of that happening than you used to,” he said.

Terrance Harris can be reached at tharris@hartenergy.com.