With drilling zero-royalty minerals giving some Lower 48 operators a competitive advantage in the down commodities market, a recent acquisition by Parsley Energy in the Delaware basin illustrates how companies can exploit existing acreage to boost balance books. Our well analysis tool pinpoints Parsley's mineral rights positioning within the southern Delaware, still considered somewhat exploratory.
In a deal set to close in mid-July, Parsley Energy has acquired mineral rights on 29,813 net acres in the southern Delaware basin. Split over more than 23,000 net mineral acres on the company's leased position in Pecos and Reeves counties and 5,000 outside its operated acreage, the US$281 million deal is Parsley's third acquisition this year.
Our upstream analysts estimate that the removal of an 18% royalty adds US$1.56 million in post-tax PV10 per well, necessitating 180 wells (undiscounted) to achieve payback on the transaction. But with a track record in Pecos County featuring one horizontal well that had a peak 30-day IP rate of 1,151 barrels of oil equivalent per day (boe/d), compared to an average IP of 698 boe/d for offset operators, Parsley could be poised for more success.
The company most recently closed a deal on 10 May for 885 acres in the Reeves Core for $US9 million in cash.
You can purchase our full US Upstream Week In Brief on demand to read this week's top stories in the North America Upstream sector, including our recent upstream forum briefings in Houston, Dallas and Oklahoma City; a construction kick-off for the Dakota Access Bakken pipeline; an active Delaware basin; and our latest Lower 48 supply update and rig-count dashboard.
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