Centennial, Colgate’s Delaware Basin Combination: An ESG Accretive?

Will bigger be better when it comes to ESG performance? Texas-based ESG Dynamics takes a closer look at Centennial Resource Development and Colgate Energy’s planned “merger of equals.”

Julie Francis, Gani Sagingaliyev and Grant Swartzwelder, ESG Dynamics
Centennial, Colgate’s Delaware Basin Combination: An ESG Accretive?

The current market is putting more focus on regualtory filing and transparency in oil and gas company’s filings and reporting, according to ESG Dynamics, which offers environmental data and compliance audits to quickly assess whether oil and gas companies are reporting ESG metrics consistently to the public. (Source: Shutterstock.com)

Centennial Resource Development and Colgate Energy plan to combine in “a merger of equals” valued at $7 billion. Both producers focus on the Wolfcamp core in Reeves and Ward counties in Texas with some New Mexico production. The new company becomes the largest pure-play Delaware Basin oil and gas operator.

The deal joins two compatible operators from an ESG perspective as Centennial emphasized in its investor presentation. Analysis of public data shows that both companies have reduced flaring emissions over the past two years. The combined entity holds fewer unplugged inactive wells compared to other top producers in the basin. Yet, oil spills have increased since 2018. Environmental regulatory reporting appears incomplete and data inconsistencies remain across various public sources. Will bigger be better when it comes to ESG performance?

Already have an account? Log In

Sign up for FREE access to view this article now!

Unlock Free Access