"Abraxas has been in crisis (essentially bankrupt) for years. The Biglari deal retained a diminished pile of tax assets ($74m, fully reserved). We will see how they cash cow it going forward but I think they will get their $50m back soon enough and still have something of value left.

Thanks for the additional detail. The transaction is obviously better than what I projected. I knew of Abraxas. They were a basket case. The name caught my attention. Don't know where their Permian acreage is. Imagine it is marginal. Everything else they owned was (sold off over time). After milking this cow for a few years, Bigliari might be able the sell the acreage for a decent price and avoid abandonment costs, assuming they don't just own the wellbore interests.

Deals like this happen all the time in the private sector. Buy depleting assets from small, mid and large companies and ride the production decline down, doing their best to minimize operating costs. As you point out, the sellers often have massive overhead costs that can be eliminated by the buyer. Wouldn't be surprised if they had one contract person, working out of a pickup truck, operating these wells.