After a constant instability and surge in Oil prices for almost two years, finally, some recovery is observed in Oil prices, offering companies and private equity firms a long-awaited relief shedding the unvalued assets in U.S. Oil patch.
The initial five months of 2021 announced $6.9 billion worth of sales of land parcels, close to surpassing the total of $7 billion recorded throughout 2020 analyzed by data vendor Enverus. So far, 2020 was the worst year for the U.S. acreage market, with extremely declined sales witnessed after 2006.
This drop in sales was attributed the plunging energy prices amidst the destructions caused due to COVID-19. 2021 is anticipated to witness an optimistic number of deals with the availability of land worth over $12 billion for either sale or for the utilization by the U.S. market, according to a bunch of industry bankers and sources interviewed by Reuters.U.S crude prices were observed to be at their highest at a 43% rise in crude prices ever since October 2018. Such circumstances have led to a shift of the unwanted acreage to be desirable for smaller groups of buyout firms, also few publicly listed energy corps with sufficient capital support.
Sales of such properties are expected to propel development after so many years of underinvestment opportunities, enhancing the productivity of U.S energy to suffice the growing demand. Recently, Warnburg Pincus, a private equity firm, appealed for indicative acquisition offers put forth for RimRock Oil and Gas, a North Dakota-based producer, a deal worth $500 million.