Operators attempting to buy into the Permian Basin now may have to go big or go home, because most of the oil- and natural gas-rich acreage in West Texas and southern New Mexico is now within the grasp of public and privately held explorers.

A slew of bolt-ons and acquisitions across the play led all onshore merger and acquisition (M&A) activity last year, a trend that has continued into the first weeks of the new year. Two multi-billion dollar deals this week alone, estimated to be worth more than $10 billion, may signal a new trend and takeovers could become de rigueur in the U.S. onshore’s No. 1 target.

Permian powerhouse ExxonMobil Corp. struck Tuesday, agreeing to an estimated $6.6 billion stock trade and contingency payment deal to buy the Bass family’s Permian assets in the northern New Mexico. Noble Energy Inc. one day earlier agreed to pay $2.7 billion and assume $500 million in debt of Clayton Williams Energy Inc. (CWEI).

“This news confirms our view that Permian acreage is very valuable and operators without large positions there (relative to their size) will continue to add to their positions or enter the basin through acquisitions,” said Sanford Bernstein & Co. analysts led by Bob Brackett.

The market did not blink at Noble agreeing to pay around $32,000/acre for CWEI, Brackett said. That means exploration and production (E&P) companies trading below that threshold may begin to look attractive.

Canaccord Genuity analyst Sam Burwell said ExxonMobil’s addition “illustrates that public companies prefer to acquire private assets.” Adjusting for the 18,000 boe/d of flowing production, the acreage cost works out to around $20,000/acre — a price some might consider on first glance to a steal in the Permian, as acreage has averaged around $28,000/acre in the past year.

However, on a per-acre basis, ExxonMobil actually paid more than twice for the Bass Operating Co. (Bopco) than what EOG Resources Inc. dropped for Yates Petroleum Corp.’s New Mexico assets in September, Burwell said.

“This deal somewhat notwithstanding, oil majors have not been significant acquirers of onshore E&P assets for some time,” he said. “Ironically, the last large M&A deal of that type was ExxonMobil’s acquisition of XTO Energy Inc. in 2009” for $43 billion. “We note, however, that the Bopco transaction was again a public company buying privately held assets.”

In early January Denver-based PDC Energy Inc. agreed to pay Fortuna Resources Holdings LLC $118 million for 4,500 net acres in the West Texas counties of Reeves and Culberson counties. Houston American Energy Corp. also agreed to pay $1.1 million to Founders Oil & Gas III LLC to acquire a 25% working interest in about 800 acres in Reeves County. Also this month, WPX Energy Inc. paid an estimated $28,500/acre, or around $775 million, to bolt-on 18,000 net acres in the Delaware sub-basin.

Undoubtedly, it will be the E&Ps with “quality acreage” that are well sized that would be the takeover targets and “undoubtedly situations in which good rock can be better exploited by a new operator,” Brackett said.

Wood Mackenzie last month predicted more M&A in North America overall this year “for the financially strong prepared to take a bullish view on long-term prices,” said Tom Ellacott, senior vice president of corporate analysis research. “The hot oil plays are U.S. tight oil, with the Permian Basin to the fore, and Brazil pre-salt. Both have materiality and development breakevens, which are among the lowest globally.”

The optimal size for a Permian deal? Most of the transactions of late have been averaging around $2 billion, but that figure may rise as the availability of smaller, privately held Permian packages declines, Brackett said. Proximity also may be key for those operators looking to bolt on leasehold.

“There is a long list of potential acquirers for any quality Permian asset,” Brackett said. “Many Permian pure-plays continue to acquire properties by issuing equity. Some large-cap E&Ps remain unexposed to the play…and we would not be surprised if ExxonMobil’s deal sparked additional moves from the integrated space.”

Following the logic of natural gas-weighted Gulfport Energy Corp., an Appalachian operator, agreeing last month to pay $1.85 billion to enter the oil-prone Oklahoma reservoirs, Bernstein analysts also said more Appalachia pure-plays could be looking to expand their positions into the Permian.