Chinese company acquires Permian Basin assets



West Texas oil and gas assets in the Permian Basin now belong to Chinese holding company Yantai Xinchao Industry Co. Midland-based operators Tall City Exploration and Plymouth Petroleum sold the property, located in Howard and Borden counties, for US$1.3 billion.

The transaction reveals an advanced understanding of unconventional exploration by Yantai Xinchao, as the properties are located near established infrastructure. The Spraberry formation appears to be the main driver for the deal, although the Wolfcamp A bench has also produced large wells in the area.

Using our proprietary North American Well Analysis Tool, our analysts queried Tall City and Plymouth wells and found a strong performance record: the data revealed initial 30-day production rates on 12 wells averaging more than 500 barrels of oil a day and yielding strong liquids cuts at over 70%.

Tall city exploration

Although it's not yet clear who will operate the assets if the deal closes, our data show that breakeven prices for nearby assets range from US$50 to US$70 per barrel. The robust Permian continues to defy trends in 2015, with multiple deals in every quarter despite a slow M&A market in the US.

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