If you grew up watching the 1980s’ soap opera Dallas (like me), you would have been engrossed by the depictions of seemingly hard-driving family-owned dynasties built on black gold. Many of the serial’s melodramatic storylines were improbable, of course. But in real-life America, what’s true is that little-known family-owned companies remain the monarchs of the US oil patch.

As much as fictional tycoon J.R. Ewing aggressively pursued deals to preserve his family’s primacy (albeit with much chicanery), the same is about to happen in the real world: A wave of M&A could reshape the country’s modern-day oil empires.

America’s closely held oil industry is surprisingly large. Ask anyone who pumps in the US and the likes of Exxon Mobil Corp., Chevron Corp. and a handful of shale behemoths come to mind. Yet publicly listed companies produce only 50% of total American oil, according to government data, while the nation’s privately owned companies control the other half.

If the latter were a country, it would pump nearly 10 million barrels a day of crude and other petroleum liquids — or nearly as much as Saudi Arabia. The sector includes all kinds of enterprises: from companies owned by hedge funds and private equity funds to billionaire families and tiny mom-and-pop enterprises.

Right now, the attention is focused on family-owned firms in the prolific Permian oil basin stretching from West Texas into southeast New Mexico. After Exxon Mobil bought publicly listed Pioneer Natural Resources, many are betting the next big M&A deal in the shale patch may involve a privately owned company.

It would make sense: Exxon itself first entered the shale business in 2017 by buying properties owned by the Bass family of Fort Worth, Texas, for more than $6 billion. And Pioneer became the company it is today thanks in part to the acquisition in 2021 of PE-backed DoublePoint Energy for $6.4 billion.

So who’s next? Ask in Midland, Texas, the capital of the Permian region, and three names are on everyone’s lips: CrownRock LP, Endeavor Energy Resources LP and Mewbourne Oil Co. They aren’t the only ones, given the dozens of smaller family-owned businesses in the basin. But they are the largest. Based on operated production, the three companies are among the top 15 largest Permian producers, according to S&P Global Inc. data. Despite industry chatter, most executives in Midland remain skeptical the families would sell. But listen to the bankers: In M&A, everyone has a price. And frankly, shale valuations are approaching — or have already reached — levels that says it’s time to auction the family silver.

CrownRock and Endeavor are the two most interesting companies, sitting on some of the best Permian acreage, with thousands of potential new-well locations that should deliver robust profits even when oil prices are relatively low. That’s the investment bankers’ pitch at least. Rival executives, looking to buy, obviously downplay the riches; reluctantly, most agree nonetheless that the acreage is as succulent as a rare prime-rib steak at the Petroleum Club of Midland.

Of the top candidates, CrownRock is the most obvious. It’s the last of the big private equity Permian companies, but with a twist: It’s a joint venture between Lime Rock Partners, the PE group founded in 1998 by former Goldman Sachs Inc. bankers, and CrownQuest, the oil business of the Texan family led by Republican donor Tim Dunn.

The joint venture

, during the early days of the shale revolution. After 15 years — double the length of the typical PE ownership — Lime Rock appears ready to cash in. It originally invested $75 million into the JV; now, the whole company may be worth in excess of $10 billion.

Endeavor is purely family-owned and has looked in the past at M&A without ever pulling the trigger. Why go ahead now? The best argument is its octogenarian billionaire owner, Autry Stephens, may be ready to retire. Not very convincing reasoning, but as I said earlier, everyone has a price. Mewbourne’s case is more complex, though, and bankers doubt the company is actually for sale.

In any case, it takes two to deal. Even if the Permian family-owned companies are prepared to sell, are buyers ready to spend? At current valuations, paying cash — particularly if issuing debt with long-term interest rates on the rise — would be a tall hurdle. For the last three years, every top 10 Permian M&A deal has involved all-share transaction, with just a single exception: Pioneer-DoublePoint had a cash element.

Perhaps the families would be willing to take a mix of cash and shares if convinced that they have further upside in the acquiring entity. After its recent $60 billion sale to Exxon, Hess Corp. typifies this in some ways. Though the company is publicly listed, the Hess family remains a large shareholder, holding about 9% throughout several vehicles — and Chief Executive Officer John Hess said his relatives are happy to keep Exxon stock for the long run.

J.R. Ewing probably would have been proud of that deal.