Vitol's U.S. venture to acquire Hunt Oil's Midland basin assets

By Devika Krishna Kumar and Julia Payne

(Reuters) -Energy trader Vitol on Friday said its U.S. upstream company, Vencer Energy LLC, will acquire Hunt Oil Co's Midland Basin assets for an undisclosed sum.

Dealmaking in the U.S. shale industry has jumped in 2021 as large companies unload assets in response to investor anger over years of weak shareholder returns. Vitol is the world's biggest independent oil trader, but this is its first upstream asset in the United States and in shale, which transformed the nation into one of the biggest global oil producers.

The Swiss trader is already a major buyer of U.S. oil and set up Vencer last year to take advantage of potentially cheap assets. Shale bankruptcies began to mount after oil prices crashed last year when COVID-19 lockdowns crippled fuel demand.

"We expect U.S. oil to be an important part of global energy balances for years to come, and we believe this is an opportune time for investment into an entry platform in the Americas," said Ben Marshall, Vitol's head of Americas, in a statement.

Vitol is buying 44,000 acres (17,800 hectares) across five counties in the Midland Basin in Texas, with current production of about 40,000 barrels of oil equivalent per day.

Bloomberg first reported the deal, saying the assets could fetch more than $1 billion.

Trading firms traditionally aim to be asset light, preferring instead to finance production through oil-backed loans. The tide, however, is changing as securing new barrels becomes more difficult with increased competition from national oil companies.

Trafigura, for instance, acquired a 10% stake in Russia's Vostok oil project in the Arctic last year, viewing it as a supply opportunity that could not be ignored.

Private companies are more willing to make deals as public companies divest non-core assets and stock prices rise, Enverus analyst Andrew Dittmar said.

Some $3.4 billion in deals were struck in the first quarter, compared with $600 million a year ago, according to Enverus, a consultancy.

Earlier this month, Vitol acquired a 240 megawatt wind farm in its first large U.S. wind asset purchase.

(Reporting by Devika Krishna Kumar in New York, Arpan Varghese in Bengaluru and Julia Payne in LondonEditing by Marguerita Choy and Steve Orlofsky)