The frenzied land grab in the Permian Basin may be cooling down because there don’t appear to be too many substantial leaseholds left to purchase, Parsley Energy Inc. CEO Bryan Sheffield said Friday.

He may have more insight than many, as his Austin, TX-based company has been one of the biggest acquirers over the past year. Earlier this month it agreed to pay $2.8 billion to Double Eagle Energy Permian LLC for a package in the Midland sub-basin. Last month Parsley paid $607 million for 23,000 net acres in the Midland and Delaware sub-basins. Last August it spent $400 million to bolt-on Midland acreage, and last spring it paid nearly $290 million for mineral rights and acreage in the Delaware.

“We’ve seen several larger packages change hands across the Permian over the last few months, and there aren’t many left, especially in true core areas,” Sheffield said during a quarterly conference call Friday morning. “For our part, we feel essentially right-sized and are focused on pulling forward the tremendous values associated with our asset base. At this point, we can truly say that there isn’t a single acreage position of comparable size and we trade or explore.”

Ongoing consolidation in the basin has value, “but we’re entering a digestion period where we expect to concentrate on optimizing and developing our own portfolio. With this in mind, we’re planning to add four rigs by the end of 2017…We believe we’re entering a sweet spot as a company, large enough to push on cost and cash flow efficiencies, but not too large to grow rapidly and adjust changing conditions.”

Moving into “digestion mode,” he said, signals “that I think we’re pretty much done through 2017” with asset purchases. “We’ve done over $3.5 billion worth of acquisitions…and we have a lot of work to do…”

Besides, available leaseholds are “basically all gone.” He called the most recent purchase from Double Eagle “basically one of the last crown jewels in the Midland Basin, and we had to take advantage of the opportunity for the ramp process.”

Privately owned explorers still may be up for sale, and some operators may find opportunities to merge, but Sheffield said it’s more likely that some privates will opt to go public toward the end of 2017.

The pending acquisition of Double Eagle “gives us a commanding presence in the Midland Basin,” he said. “The inventory potential is tremendous with around 1,800 net locations in our highest priority target, the Lower Spraberry, Wolfcamp A and Wolfcamp B, and many more locations and other promising formations like the Wolfcamp C…Most of the position is operated, and nonoperated portions mainly distributed around the edges.”

In a transaction like Double Eagle “you pay for the net, but most of the upside is in the gross,” he said. Double Eagle’s average working interest in its operated properties is roughly 60-70%, which means “there’s a lot of bolt-ons that need to be done, buying out working interest, increasing our net. Usually, you can get cheaper buys from nonoperated working interest sellers versus operated…like $30,000/acre. And usually you can get nonoperated for like $15,000 an acre…

“The acreage represents a compelling value today, but ultimately, we expect the map to fold inward to the central core-operated positions. Already there are years of long lateral, high work in interest locations in place in the best parts of the basin. We’ll drill these locations first and all the while we’ll be working the rest of the asset blocking up, extending laterals and increasing our net, which is the same playbook we use to build our legacy Parsley position.”

The Double Eagle leasehold is unique in that it is “essentially undeveloped horizontally. The time to acquire an asset is in its infancy, and we’ll have a lot of virgin rock to drill, which is really positive for expected productivity. It also allows us to optimize layouts for long-term fully down space developments…

“After integrating these assets, we believe we could run around 25 rigs on a combined footprint in the near-term. That number will surely increase over time with additional infrastructure buildup. So, we’ve definitely increased our peak production potential.”

Parsley’s production jumped 79% year/year during the fourth quarter and was 5% higher sequentially at 45,109 boe/d from 25,207 boe/d. Oil production increased to 2.8 million bbl, up 5% from the third quarter and 92% higher than in 4Q2015, representing 68% of total output. Natural gas production increased to 3,812 MMcf from 2,711 MMcf, while liquids output increased to 704,000 b/d from 405,000 b/d.

Meanwhile, lease operating expense/boe decreased 14% sequentially to $3.56.

Parsley’s net losses were higher in 4Q2016 at $30.7 million (minus 17 cents/share), from a year-ago loss of $15.2 million (minus 12 cents). The loss widened in 2016 from 2015 to $74 million (minus 46 cents/share) from $50 million (minus 45 cents).

Capital expenditures during the final three months of 2016 increased sequentially to $158 million from $92 million, “reflecting a 72% quarter/quarter increase in net completed footage,” the company said. Additional funding was directed not only to more horizontals, but one vertical well and two saltwater disposal wells.