Chord Energy, formed through the merger of Whiting Petroleum and Oasis Petroleum in July 2022, is streamlining its portfolio through non-core divestitures.
The company is also scouting potential M&A with a healthy amount of cash in its coffers for dealmaking.
Chord sold off or is selling non-core assets located outside of the Williston Basin for proceeds of approximately $35 million, the company said in first-quarter earnings.
The divestitures, which were legacy Whiting Trust holdings, were made up of multiple packages in various parts of the U.S., Chord President and CEO Danny Brown said during the company’s first-quarter earnings call.
The divested assets had recent production of about 1,100 barrels of oil-equivalent per day (boe/d) and included oil volumes of about 900 bbl/d, Chord said.
“The divestitures decreased oil volumes by about 600 bbl/d for the full year, but Chord expects to replace all 600 bbl/d given strong well performance and a modest acceleration of activity in the first quarter,” Brown said on the call.
Brown said that Chord still has a small amount of non-core assets that don’t fit within its portfolio that could still be monetized.
“They're nice assets, but probably make more sense in someone else's hands than in our own,” Brown said.
Earlier this year, the company retained EnergyNet to market some of its non-core assets across the U.S., including in the Permian Basin, the Gulf Coast and Central and Northern Rockies. The combined assets averaged about 2,200 boe/d of production, 80% of which is oil.
Hart Energy has reached out to Chord and EnergyNet for more information on the divested assets. The sales are expected to close during the second quarter.
RELATED: Whiting, Oasis Petroleum Become Chord Energy as Merger Closes
Williston M&A opportunities
As the company offloads non-core properties, Chord is searching for opportunistic ways to expand its position in the Williston Basin in North Dakota and Montana.
Chord ended the first quarter with approximately 936,000 net acres in the Williston and 165,000 boe/d (95,000 bbl/d oil) of production, according to investor materials.
As Chord searches for more scale in the Williston, the company is keeping its eye on opportunities for consolidation.
Chord has plenty of cash on hand at its disposal to potentially put to work on acquisitions. The company’s cash of $592.3 million actually exceeded its debt of $400 million as of the end of the first quarter.
“One of the reasons we have [that cash balance] is because we do want to be front-footed and opportunistic if we see meaningful and additive and accretive M&A in front of us,” Brown said. “And I think we’ll see that.”
While the company doesn’t have a timeline for M&A laid out, Chord anticipates it will locate some attractive acquisition opportunities in the future.
“I think that will probably be the first utilization of that capital,” he said.
Chord is willing to look at other plays for potential deals, but potential synergies within the Williston raise the bar for deals in other basins.
Despite the desire to grow larger through M&A, oil and gas price volatility has given way to an interesting time for energy transactions, Brown said.
Price volatility typically makes M&A more difficult because of imbalances in the bid-ask spread between buyers and sellers, he said.
Oil and gas mineral and royalty buyer Sitio Royalties Corp. chose not to execute on M&A in the first quarter because of widening bid-ask spreads for potential deals. The slowdown in dealmaking marked the first time in two years Sitio didn’t announce or close acquisitions during a quarter.
Whiting and Oasis combined in July 2022 through a $6 billion merger.
RELATED: Oil, Gas Price Volatility Slows Upstream M&A Market
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