A $6.3 billion deal announced by
Chevron
to buy midsize oil-and-gas producer
PDC Energy
this past Monday doesn’t signal a new wave of large-scale energy mergers. Instead, the deal may point to a path to consolidation that Wall Street hadn’t expected.
Mergers and acquisitions are on the industry’s mind. Energy earnings and stocks are no longer growing. But recent M&A has been modest and, similar to PDC, not transformational, such as
Exxon Mobil’s
$41 billion XTO buy in 2010.
Most deals involve public companies buying private companies or acreage.
Diamondback Energy
picked up Texas assets from privately held Lario Oil & Gas in late 2022 for less than $2 billion. Chevron’s deal could make smaller operators more attractive, says Mizuho Securities analyst Nitin Kumar.
Permian Resources,
Matador Resources,
and
Callon Petroleum
all rose on Monday.
| Buyer | Seller | Deal Type | Value |
|---|---|---|---|
| 1. Bartex Energy | Ranger Oil | Corporate | $2.5 B |
| 2. Matador Resources | Advance Energy | Property | 1.6 B |
| 3. WildFire Energy | Chesapeake Energy | Property | 1.4 B |
| 4. INEOS Energy | Chesapeake Energy | Property | 1.4 B |
| 5. Undisclosed | Chesapeake Energy | Property | 439 M |
Source: Enverus Energy Analytics
Big deals aren’t out of the question. The Wall Street Journal reported that Exxon has talked with
Pioneer Natural Resources
about an acquisition. Neither company would comment. But Pioneer CEO Scott Sheffield said in an interview with Barron’s in April that, with buyers resisting big premiums, he doesn’t expect a near-term M&A wave. “For buyers and sellers, it’s very hard to agree to terms,” he said.
PDC, which mostly drills in Colorado, opens new possibilities. “The market has been focused on Chevron potentially acquiring a Permian asset,” wrote TD Cowen analyst Jason Gabelman. Texas and New Mexico’s Permian Basin is the most productive U.S. oil and gas area, with far more players than Colorado. Shares of Colorado operator
Civitas Resources
rose 0.56% on the week.
Monday 5/29
Equity and fixed-income markets are closed in observance of Memorial Day.
Tuesday 5/30
Hewlett Packard Enterprise,
HPInc.,
and U-Haul Holding report quarterly results.
S&P CoreLogic releases its Case-Shiller National Home Price Index for March. The consensus estimate is for a 1.5% year-over-year decline, after a 2% increase in February. Home prices slid for seven consecutive months before rising 0.2% in February. The index is 4.9% below its record high from last June.
The Conference Board releases its Consumer Confidence Index for May. Expectations are for a 100 reading, about one point less than the April figure. The index is at its lowest level since last summer.
Wednesday 5/31
Advance Auto Parts,
Chewy,
CrowdStrike Holdings,
NetApp,
Okta,
and
Salesforce
announce earnings.
Chevron,
Exxon Mobil,
Meta Platforms, and
Walmart
hold their annual shareholder meetings.
The Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey. Economists think there were 9.44 million unfilled positions on the last business day of April, 150,000 fewer than in March. Job openings fell below 10 million in February for the first time since May 2021, a sign that a historically tight labor market is loosening.
The Institute for Supply Management releases the Chicago Business Barometer for May. The consensus call is for a 47 reading, almost two points lower than April’s. The index has been below the expansionary level of 50 for eight consecutive months.
Thursday 6/1
Broadcom
announces second-quarter fiscal-2023 results. Shares of the chip maker are up 45% this year and hit a record high this past week, spurred by the announcement of a multiyear, multibillion-dollar deal to supply 5G radio-frequency components to
Apple.
Cooper
Cos.,
Dell Technologies,
Dollar General,
Hormel Foods,
Lululemon Athletica,
MongoDB,
and
Zscaler
hold conference calls to discuss quarterly results.
ADP releases its National Employment Report for May. The economy is expected to add 170,000 private sector jobs, following a 296,000 increase in April. The services sector continues to account for the bulk of job gains.
ISM releases its Manufacturing Purchasing Managers’ Index for May. The consensus estimate is for a 47.1 reading, matching April’s.
Friday 6/2
The BLS releases the jobs report for May. Economists forecast a 200,000 gain for nonfarm payrolls, after a 253,000 increase in April. The unemployment rate is seen edging up to 3.5% from 3.4%, which was the lowest since 1969. Average hourly earnings are expected to be up 4.3%, year over year, a tenth of a percentage point less than in the previous tally.
Write to Avi Salzman at avi.salzman@barrons.com
Next Week
Read the full article here
