New Insights Revealed on Blockbuster Anschutz PRB Oil and Gas Agreement

More details have emerged about the Anschutz acquisition of Oxy/Andarko oil and gas assets in the Powder River Basin.

A spokesman with Occidental Petroleum told Cowboy State Daily on Wednesday that the company is keeping 150,000 acres of what it considers core acreage in the Powder River Basin, which it intends to develop in the future.

The company had 350,000 acres in the Powder River Basin in all, leaving up to 200,000 acres that the company could have sold to Anschutz.

With 200,000 acres, that would make the new size of Denver-based Anschutz Exploration Corp. up to 660,000 acres — still an extremely large player in the Powder River Basin in northeast Wyoming and southern Montana.

“Oxy’s recent divestiture to Anschutz specifically excluded lands in Converse and Niobrara counties, which are included in Oxy’s development plans,” Occidental spokeswoman Jennifer Brice told Cowboy State Daily in an email.

Oxy also did not sell any of its assets outside of the Powder River Basin to Anschutz. It will keep more than 650,000 net acres it manages in Wyoming, a figure that includes the 150,000 core acres in the Powder River.

“Oxy remains very committed to Wyoming, our operations and our interests in the Powder River Basin and across the state,” Brice added.

Brice did not respond to questions for further clarification on its sale in the Powder River Basin, nor would it say whether the sale had achieved the company’s debt reduction goals following its purchase of the CrownRock asset in the Texas Permian Basin.

Cowboy State Daily had also called Anschutz for information about the Oxy sale. The person hung up as soon as the word “reporter” was heard.

Large Enough To Scale

The Powder River Basin has about 11 oil and gas rigs running right now, according to Enverus analyst Ryan Hill, whose area of expertise includes the Powder River Basin.

“Our broad view of the basin is that you have a couple of pretty good unconventional targets, like the Niobrara and the Mowry (formations), but the economics are not strong,” Hill said. “The 65-plus break-evens for unconventionals like the Mowry and Niobrara just don’t compete with a Tier 1 basin like the Bakken (in the Williston Basin of North Dakota).”

These economics are why there are just 11 rigs running in the Powder River now, Hill suggested.

Scale is one way an operator can overcome the economic issue, Hill said. The size helps make construction of infrastructure to bring down transportation costs economically feasible.

With up to 660,000 acres, Anschutz probably has the critical mass it needs to pursue such a tack, Hill suggested, and that could in turn help other operators in the play.

“If they keep on picking up meaningful pieces of acreage, because they have been the most active driller in the basin since 2020, that could improve the overall future prospects of the play,” Hill said.

Your Mileage May Vary

The Powder River Basin did lose a lot of steam in 2016, when oil prices fell by half of what they were in 2015, caused in part by OPEC flooding the worldwide oil market in an effort to take its market share back from American shale.

“We still haven’t gotten back to peak rig activity,” Hill said. “Like in 2023, it was in the mid to low teens, but we still haven’t gotten back to pre-pandemic levels, and we don’t expect that to happen either.”

Economics are the biggest headwind facing the Powder River Basin, Hill said.

But, while rig counts have continued to lag, the players who are in the basin hint at its true value in due time.

The two leading operators in the basin now are both private corporations — Anschutz and Harold Hamm’s Continental, which has in the past billed itself as America’s oil champion.

But there are also some fairly well-known publicly traded companies in the basin as well, like EOG.

EOG has become known in the industry for buying overlooked assets in under-explored areas. By getting position ahead of price surges, it keeps its costs competitive down the line, once the play becomes a hot spot.

EOG has said in past earnings calls that the pay column in the PRB is almost a mile deep.

Continental, too, is well-known for picking undervalued plays and turning them into winners, as they did in the Bakken as well as other plays.

Renée Jean can be reached at renee@cowboystatedaily.com.