Drilling rights in the Permian Basin of West Texas and New Mexico averaged about $24,000 an acre in recent deals, down 67% from 2018, according to Rystad Energy, an Oslo-based research firm. Across U.S. shale, the average price has plummeted to about $5,000 an acre, compared with $17,000 two years ago.

The plunge in acreage prices is a sign of the crisis facing U.S. oil and gas explorers, who are grappling with a pandemic-driven slide in crude demand after more than a decade of debt-fueled production growth. Large, financially stable producers are gobbling up smaller peers amid a wave of takeovers, the biggest of which was ConocoPhillips’s proposed purchase of Concho Resources Inc. for $9.7 billion.

Source: Bloomberg Intelligence

“Low equity prices and the need for investor support is motivating many operators to look for new options to merge,” Rystad senior analyst Alisa Lukash wrote in a report Thursday.

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Industry-wide costs for drilling and completing wells will probably drop as much as 5% next year because of consolidation, increased standardization and a drop in service costs, Rystad said. Even more capital will be allocated to the most prolific Permian acreage, the firm said.

Permian-focused Concho’s drilling rights were valued at about $10,471 per acre in the proposed ConocoPhillips takeover announced last month, according to Bloomberg Intelligence. That compares with $75,504 an acre for Concho’s purchase of RSP Permian Inc. in 2018.