Think of it as Rex Tillerson’s parting gift. Exxon Mobil announced Tuesday that it would acquire the Permian basin oil and gas interests of Fort Worth’s Bass family for about $6 billion.
Exxon will get 275,000 acres, much of it in the sweet spot of the hot Delaware basin play. The land currently produces 18,800 barrels per day — just a sliver of what it will be capable of once Exxon puts its capital to work. The company figures there is an incredible 60 billion barrels of oil in place under the Bass land. Really? “Yes.” Come on, really? “Yes. Yes!” says spokeswoman Suann Guthrie. Sure only 3.4 billion barrels of it is recoverable now, but with better technology and higher oil prices there’s no telling how long the region will keep giving.
This is no surprise move. Exxon has been adding tens of thousands of acres to its Permian holdings over the past three years, making deals with private landowners like billionaire Autry Stephens, to partner on drilling. It’s a strategy that Rex Tillerson set upon two years ago, and is delivering on now, even after he’s gone to Washington. Exxon confirmed that Tillerson personally negotiated the deal with Sid Bass. A spokesman couldn’t say whether or not there may be other deals in Exxon’s pipeline that Tillerson negotiated before climbing aboard the Trump train.
For the Bass family, this looks to mark the end of an era. The origin of their $10 billion fortune was Sid Richardson, who in the 1930s amassed a fortune as one of the great Texas oil wildcatters. A bachelor and childless, Richardson left most of his oil assets to his foundation, but a chunk went to the four sons of his nephew and protege, Perry Bass. Perry and his sons Sid, Robert, Ed and Lee consolidated the best of Richardson’s holdings, including vast swaths of New Mexico, and built a small fortune into a big one. In 2005 they sold a pipeline business for $1.6 billion.
It’s unclear how the Basses will divvy up the Exxon proceeds. The brothers tend to invest separately; Robert founded Oak Hill, which manages $30 billion in private equity (including supersonic jet startup Aerion). Sid worked for years with billionaire investor Richard Rainwater and was the largest holder of Walt Disney until a $2 billion margin call in 2001. In 2015 Sid put up $125 million to rescue Texas ice cream maker Blue Bell as it struggled through a deadly listeria outbreak. Ed famously invested in Biosphere 2, which in a bizarre coincidence(?) was run by Trump-hand Steve Bannon. Ed has also worked tirelessly to revitalize downtown Fort Worth and its Sundance Square. Lee owns a vast ranch in south Texas. They’ve all been on the Forbes 400 for decades.
For Tillerson, the deal must have been a sweet close to a long career. The former Exxon CEO started his career in the Texas oilfields. Incredible to end with a deal there 40 years later. Now it’s his replacement Darren Woods, who gets to take the credit. Woods said in a statement that Exxon thought the Permian would be the biggest growth area for American oil because the prolific Wolfcamp zones 8,000 feet deep in the Delaware sub-basin have proven to generate high returns, even at $50 oil. A spokeswoman says Exxon now has 10 rigs running in the Permian, but could add 15 rigs on the Bass acreage alone. The “highly contiguous” acreage will allow for exceptionally economic drilling with 2-mile laterals and profitability expected even at $40 oil. Responsibility for developing the Bass acreage will rest with Sara Ortwein, the new president of Exxon’s XTO Energy subsidiary, based in the Bass backyard of Fort Worth.
By Christopher Helman
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