BP (LON: BP.) has opened a data room on Devon Energy’s Eagle Ford shale operations in South Texas, Reuters reported, citing six people familiar with the matter. The London-listed energy major is weighing a possible acquisition as part of a renewed push to grow its US shale footprint.
BP shares closed today at 571.8p, up 2.62% from Wednesday’s close of 557.2p. Reuters did not tie this move to the Devon report, and the report does not establish that news of BP’s interest had reached the market before the close.
According to Reuters, BP has been targeting predominantly oil-producing shale assets valued between $2bn and $5bn since O’Neill took over as chief executive in April, having spent the previous 18 months focused on debt reduction and a $20bn divestment programme that had kept it largely absent from shale data rooms. Devon’s Eagle Ford data room opened in late August, three sources told Reuters.
The appeal lies in proximity. BP’s existing Eagle Ford operations, run through its BPX Energy shale business, produced roughly 205,000 barrels of oil equivalent per day of BPX’s total 545,000 boepd in the second quarter, and BP is targeting more than 650,000 boepd from the unit by 2030. Four sources told Reuters that buying acreage next to that existing footprint would bring cost savings and familiarity with the local geology. Part of Devon’s Eagle Ford asset once sat inside a BP-Devon joint venture that was dissolved last year.
Valuations remain unsettled. TPH, the energy arm of investment bank Perella Weinberg Partners, estimated in a note on Wednesday that the Eagle Ford asset could be worth around $4.5bn, while sources close to the deal cited a range of $3.5bn to $4bn to Reuters. Devon is marketing the asset, along with its Powder River Basin acreage, as part of a wider portfolio review following its $58bn merger with Coterra Energy. Crude prices above $100 a barrel on Middle East tension last week have sharpened interest in US energy assets even as that volatility makes it harder for buyers and sellers to agree a price, Reuters reported.
BP declined to comment and Devon did not respond to a request for comment, Reuters said. Entering a data room does not commit BP to a bid.