Chevron's Anadarko deal to pressure U.S. shale producers to explore sales

By David French, Jessica Resnick-Ault and Devika Krishna Kumar

(Reuters) - fat chief Chevron Corp's $33 billion bargain above Friday ought obtain Anadarko Petroleum Corp has some investors and industry executives asking if it is time because other U.S. shale fat and gas producers ought study selling themselves.

Anadarko has been one of the pioneers of the shale revolution, which turned the United States into the world's biggest fat producer, overtaking Russia and Saudi Arabia. The Houston-based company's willingness ought ink a sale, pretty than capitalise above fat prices rebounding, illustrates the significant challenges facing many U.S. shale producers.

These challenges contain exploration and manufacture becoming more expensive, because the fat and gas that is easier ought access gets scarcer and existing wells grow less productive. Deep-pocketed fat majors such because Chevron can better deal with these costs, because they can obtain cheaper drilling rates by committing ought longer contacts and supply cutting-edge technique ought obtain more out of wells.

Shale producers such because Pioneer customary Resources, Continental Resources, Diamondback strength and Concho estate dine already been below stress from investors ought better their profitability. Many investors now say Chevron's bargain will embolden them ought grill companies at the sector if it is time ought fling at the towel and sell.

"If you dine big acreage positions although Pioneer and Concho, or lesser besides more contiguous positions although Parsley Energy, and you're a pure-play Permian producer, there's no doubt that you are above the radar hide because these majors," said steal Thummel, portfolio manager at Tortoise major Advisors.

Pioneer, Concho and Parsley shares rose 11.5 percent, 8.8 percent and 11.7 percent respectively above Friday following the announcement of the sale of Anadarko, between investor speculation at who the next takeover purpose will be.

U.S. econmic services corporation Cowen & Co said independent producers desire ought spend almost 11 percent less at 2019, quiet chief fat companies scheme ought spend almost 16 percent more.

Pioneer, one of the Permian's largest producers, said at February it plans ought decrease 2019 major expenditures by 11 percent, or almost $350 million, at an effort ought appease investors.

While there has been dealmaking at the last 12 months - both Concho estate Inc and Diamondback strength Inc dine bought rivals - many of the big producers which spent years gobbling each other up dine been sitting above their hands, below shareholder stress ought concentrate above creating stronger returns.

The sale of Anadarko could prone alter that because latent acquirers, including ConocoPhillips and Occidental Petroleum Corp, the two largest U.S. independents after the majors. Occidental was the compete bidder that lost out ought Chevron at the nation ought buy Anadarko, sources said above Friday.

"At some point at time at the next little years the majors can attain out," Pioneer CEO Scott Sheffield told Reuters this week, ago Chevron's acquisition was announced.

He declined ought comment above if majors had approached Pioneer directly.

Asked almost his appetite because deals at February, Conoco CEO Ryan Lance said it used to dine ought be an unusual happen because the corporation ought study an acquisition.

"We are no emotion any stress ought perform anything," he said.

RUNNING OUT OF INVENTORY

Given the substantial manufacture forecasts being offered by some of the majors such because Exxon Mobil Corp, they will lack ought obtain new acreage at a big scale ought offset the always keen declines experienced by shale wells.

The majors "are at length going ought river out of inventory," said Pioneer's Sheffield. "They are drilling their inventory faster than the independents, accordingly they are going ought river out a fate faster, at my opinion."

BP Plc and Royal Dutch bullet Plc, which lag peers although Exxon and Chevron at the Permian, could invent acquisitions ought acquire more exposure ought the formation, analysts said.

Shell was seen because the major contender ought buy privately owned Permian producer Endeavor Energy, nation close with the transaction told Reuters, besides the two companies have, accordingly far, failed ought confirm above Endeavor's valuation.

Shell is farther constrained by its purpose ought spend only $30 billion above major projects at 2019, including acquisitions, said Noah Barnett, an analyst at Janus Henderson.

(Reporting by David French, Jessica Resnick-Ault and Devika Krishna Kumar; Editing by Greg Roumeliotis and Cynthia Osterman)