Flashback: Peak Oil

James McManus, CEO of Energen Corp. in 2014, told us, “We invested about $1 billion between 2009 and 2012 to increase our land position in the Permian Basin to kick-start and accelerate our oil growth.” Photo by Art Meripol

Figure it was an early Christmas present for folks who still fret over America’s energy security.

On November 28, 2018, the U.S. Department of the Interior released its confirmation of huge new oil and gas reserves in West Texas and running west across New Mexico and into Arizona. Officials said that formations in the Delaware Basin of Texas and New Mexico’s Permian Basin — in particular, the Wolfcamp Shale — could now be seen to contain “our largest continuous oil and gas assessments ever released.”

Even before that announcement, industry analysts at Rystad Energy in July 2018 pegged the global reserves scoreboard: U.S., 264 billion barrels of oil; Russia, 256 billion, and Saudi Arabia, 212 billion. Add the new numbers for the Delaware and Permian basins, score U.S. reserves now at more than 310 billion.

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Hurray for our team. And a standout on the team you could boast as a hometown favorite.

Beginning in 2009, Birmingham-based Energen Corp. became a pioneer in exploration of shale oil in the region outlined in the Department of the Interior assessment.

“In July 2013, the company announced that tests on several Wolfcamp wells in the Permian Basin produced positive results and stocks that month rose 7.5 percent, to $60.74,” we reported in the January 2014 issue of Business Alabama, “Energen’s Third Act Gushes.”

A global glut of supply drove oil prices down over the next three years, but producers kept on pumping, including Energen.

With stock prices down, corporate raider Carl Ichan targeted Energen in 2017 and in 2018 precipitated a sale to another, slightly larger player on the Permian/Delaware range — Midland, Texas-based Diamondback Energy. The acquisition became official Nov. 29, one day after the Department of the Interior’s new peak assessment.  

Chris McFadyen is the editorial director of Business Alabama.

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