One of the most popular parlor games played by CEOs, investment bank­ers, analysts and investors is like cha­rades—a real guessing game. We’re talking about lively discussions that put one E&P com­pany with another and consider which compa­nies would be choice merger targets—or put another way, the most vulnerable.

Sliding oil and gas prices in first-quarter 2020 turned up the pressure cooker where E&P com­panies already found themselves stewing, many in a pungent sauce of high debt. The downturn and uncertainty will push some companies on the margin to consider selling, in hopes of tak­ing a buyer’s stock for some upside.

Opportunities abound. Many private-equi­ty-backed E&P firms have reached their sell-by date of three to five years since inception. If they are in the Permian Basin, they are all the more ripe for consolidation. After all, doesn’t everyone want more Permian acreage?

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