In Inventory-Scarce Permian, Could Vitol’s VTX Fetch $3B?

Commodities trading house Vitol is reportedly exploring a $3 billion sale of its shale business VTX—a high price for coveted Permian Basin drilling locations, analysts say.

Austin-based VTX Energy Partners has aggregated 46,000 acres in the southern Delaware Basin, spanning the Reeves-Pecos County line in Texas, according to its website.

VTX production during the fourth quarter averaged about 46,000 boe/d net (50,000 boe/d gross) according to analysts at TD Cowen.

VTX averaged about 43,000 boe/d in December, according to Texas Railroad Commission (RRC) data. Oil output averaged 32,000 bbl/d. Natural gas output averaged around 63 MMcf/d.

VTX, launched in early 2022, is Vitol’s second Permian Basin shale business. Vitol sold Midland Basin producer Vencer Energy to Civitas Resources for $2 billion in early 2024.

With Permian Basin drilling inventory in high demand, Vitol could look to sell one of the last remaining private E&Ps of scale left in the Delaware Basin.

VTX CEO Gene Shepherd declined to comment on the sale rumors. Vitol also declined to comment.

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Scarcity value

The Permian “resource scarcity” theme was further amplified by Diamondback’s $4.1 billion acquisition of Double Eagle IV in the Midland Basin in February, analysts say.

Double Eagle IV was one of the last remaining private Midland Basin operators. Diamondback paid an estimated $6.7 million per net location in the Double Eagle IV deal, according to Enverus Intelligence Research data.

Other recent Permian transactions have seen drilling inventory trade hands for around $3 million per net location, per TD Cowen analysis.

But that figure has crept up with fewer takeout candidates available to buy than in prior years:

• Exxon Mobil paid ~$4.4 million per location in its $60 billion acquisition of Pioneer Natural Resources;
• Diamondback Energy paid ~$3.7 million per location in its $26 billion acquisition of Endeavor Energy Resources LP; and
• Occidental Petroleum paid ~$4.8 million per location in its $12 billion acquisition of CrownRock LP.

“Perhaps recognizing bids have eclipsed [$6 million-plus] for undeveloped locations,” Vitol could be exploring a sale of VTX, TD Cowen analysts Gabe Daoud Jr. and David Deckelbaum wrote March 27.

TD Cowen estimates VTX has an inventory of 120 net locations remaining—based on VTX’s 46,000 net acres and assuming 1,280-acre drilling spacing unit (DSU) development and 12 wells per DSU, the bank said.

A $3 billion price tag would value VTX’s southern Delaware inventory at between $6 million and $7 million per undeveloped location—implying “another rich deal.”

The value of VTX’s production alone could be worth about $2.1 billion, or around $43,000/flowing boe, based on a $70/bbl WTI and $3.50/Mcf Henry Hub price deck.

VTX turned 39 gross wells to sales in 2024 and appears to be running a 2-rig program, TD Cowen said.

Under the same development cadence, analysts estimate VTX’s net production could be sustained at 50,000 boe/d for about four years before declines onset.

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Southern Delaware M&A

The Midland Basin and northern Delaware Basin have been red-hot with M&A activity since late 2023.

But fewer deals have transacted in the Delaware Basin’s southern reaches, deep in the West Texas Trans-Pecos region.

Breakeven costs are generally higher while productivity is lower for southern Delaware wells compared to wells in the core Delaware. It’s an area of the Permian Basin “that most publics have largely been net sellers in,” TD Cowen wrote.

Large-cap publics ConocoPhillips and Occidental Petroleum have been sellers in the southern Delaware over the past year.

ConocoPhillips sold $600 million in non-core southern Delaware assets in the fourth quarter. Production from the assets averaged 15,000 bbl/d in 2024. The buyer was not identified.

Occidental sold its non-core “Barilla Draw” asset in the southern Delaware to Permian Resources for $818 million in September. Permian Resources has emerged as a clear consolidator in the southern Delaware Basin.

Harold Hamm’s Continental Resources also has a large footprint in VTX’s neighborhood. Continental made a splashy debut in the Delaware Basin through a $3.25 billion acquisition from Pioneer in 2021.

Apart from VTX, few private takeout targets remain standing in the southern Delaware.

One is UpCurve Energy, which has been in the southern Delaware since launching with backing from Post Oak Energy Capital in 2015.

UpCurve’s leasehold is about 21,000 net acres; Net production averaged 13,000 boe/d (50% oil) last summer, CEO Zach Fenton told Hart Energy.

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