Independent company Parsley Energy, along with many others in the region, reported an increase in its oil production in the Permian Basin this year. Underneath a sunset, the company’s drillsite sits at the Trees State in the Delaware Basin. (Source: Parsley Energy)
There are 380 operators active in the Permian Basin, and large and small independents and private-equity companies account for 80% of production, according to a recent Midland Reporter-Telegram article.
Stratas Advisors reports that strong growth in the Permian will continue to boost U.S. production. “When looking into the data from operators in the Permian (Bone Spring, Spraberry, Wolfcamp Delaware and Wolfcamp Midland) the term ‘bigger is better’ is ringing true. Since the beginning of 2017, the average of the top three quintiles has seen lateral lengths, fluid volumes and proppant volumes increase. This has resulted in peak rates in the Permian to rise 40%,” Whitney Gomila, a senior analyst with Stratas Advisors, told E&P. “Looking ahead to 2020, Stratas expects Permian production to average 8 MMboe/d (~15% YoY), which represents almost 30% of Lower 48 production.”
GlobalData recently reported that the Permian Basin is “the most prolific shale play in the world” and attributes this to its “abundant hydrocarbon reserves and the ability to drill longer laterals.” In the report, GlobalData identified companies such as Occidental Petroleum, Chevron, Pioneer Natural Resources, Concho Resources and EOG Resources as among the leading producers in the Permian Basin shale in 2018.
In the following section, E&P profiles some of the most active Permian operators, providing their recent production updates and strategies moving forward.
Editor’s Note: The majority of information within these profiles was written based on second-quarter 2019 reports.
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Apache Corp.
Apache’s Permian production averaged 226,000 boe/d during the second quarter, and the company operated an average of 12 rigs and drilled and completed 54 gross operated wells, according to Apache’s second-quarter 2019 results report.
In the Midland Basin, the company averaged four rigs and placed 20 wells on production during the second quarter.
In the Delaware Basin outside of Alpine High, Apache averaged three rigs and placed nine wells on production during the second quarter.
At Alpine High, the company averaged five rigs and two frac crews and placed 26 wells on production during the second quarter, and production was reported at 49,000 boe/d.
“Apache continues to deliver cost reductions in the Delaware Basin with average drilling and completion costs per foot down 26% and 41%, respectively, from 2017 through the end of the second quarter,” according to the report.
“While total Permian production volumes were strong, oil volumes trailed guidance due to timing delays bringing wells online during the quarter. We will catch up in the second half of 2019 and exit the year with oil production on plan and with strong momentum heading into 2020,” Apache CEO and President John J. Christmann IV said in the report.
For Permian Basin oil, Apache expects third-quarter production to be 94,000 boe/d to 98,000 boe/d and fourth-quarter production to be 100,000 boe/d to 105,000 boe/d. At Alpine High, Apache expects third-quarter production to be between 70,000 boe/d to 75,000 boe/d.
In addition, as stated in the report, one of Apache’s second-half 2019 objectives is to increase Permian Basin oil well completions and oil production.
Editor's note: View updates from the company here.
BPX Energy, a division of BP
In October 2018, BP Plc changed the name of its Lower 48 business to BPX Energy. “The change marks a new era of growth for BP’s U.S. onshore oil and gas unit, which has operated as a separate entity since 2015,” the company stated on its website. BPX Energy produces primarily natural gas, along with oil, condensate and NGL.
In November 2018, BP completed a $10.5 billion acquisition of BHP Billiton’s unconventional oil and gas assets in the Permian-Delaware Basin in Texas, along with two premium positions in the Eagle Ford and Haynesville shale plays in Texas and Louisiana. At the time of the acquisition, the assets were producing 190,000 boe/d, of which about 45% were liquid hydrocarbons, BPX reported.
In February of this year, Mohit Singh, senior vice president of business development and exploration for BPX Energy, presented at Hart Energy’s DUG Haynesville conference and shared how BP is transforming its U.S. onshore business following that $10.5 billion acquisition last year. Starting March 1, the company took over operations from BHP. “The deal includes assets in the Permian’s Delaware Basin, adding about 41,000 boe/d in production with 3,390 gross drilling locations on an 83,000-acre position,” a HartEnergy.com article stated. By 2021 BPX Energy expects to have 3,500 wells (down from 9,400 in 2018) and operate in only the Delaware, Eagle Ford and Haynesville (down from six basins prior to divestitures), according to the article.
In its second-quarter 2019 results report, BPX Energy reported it had an average of three company-operated rigs in the Permian during the quarter.
Editor's note: View updates from the company here.
Centennial Resource Development Inc.
Centennial Resource Development is an independent oil producer with assets in the Delaware Basin in New Mexico and Texas. The company has about 80,100 net acres (90% operated) and about 2,400 horizontal drilling locations (about 60% oil).
In the second quarter this year, average crude oil production increased 38% to 43,105 bbl/d of oil compared to the prior year period, and average total equivalent production increased 32% in the second quarter and 33% for the first six months of 2019 compared to prior year periods, according to Centennial’s second-quarter 2019 results press release. As of Aug. 5, Centennial expected to reduce its operated rig count from six to five in September, maintaining a five-rig drilling program for the remainder of the year.
Editor's note: View updates from the company here.
Chevron
In the Permian Basin, Chevron reported net production of 159,000 bbl/d of crude oil, 501 MMcf/d of natural gas and 66,000 bbl/d of NGL in 2018. “We are among the largest producers of oil and natural gas in the basin, and with approximately 2.2 million net acres, Chevron is one of the Permian Basin’s largest net acreage holders,” the company stated on its website.
Second-quarter 2019 unconventional production in the Permian was 421,000 bbl/d, representing growth of more than 50% compared to a year ago, according to Chevron’s second-quarter 2019 results news release.
Chevron has added almost 7 Bbbl of resource and doubled its portfolio value over the past two years in the Permian Basin, according to a March 2019 company press release. “Permian unconventional net oil-equivalent production is now expected to reach 600,000 barrels per day by the end of 2020 and 900,000 barrels per day by the end of 2023,” the release stated.
The company also recently entered into agreements to purchase renewable power in Texas for its Permian Basin operations.
Editor's note: View updates from the company here.
in the Permian Basin. (Source: Chevron)
Cimarex Energy Co.
Cimarex Energy Co. is an independent oil and gas E&P company that invested $325 million in exploration and development during the second quarter, of which 83% was focused in the Permian Basin, according to the company’s second-quarter 2019 results report.
In the first half of the year, Cimarex brought 56 gross (37 net) wells on production in the Permian. Of those, 44 gross (32 net) wells were completed during the second quarter. As of June 30, there were 44 gross (20 net) wells waiting on completion and Cimarex was operating eight drilling rigs and two completion crews in the region, the report stated.
Production from the Permian averaged 188,703 boe/d in the second quarter, a 55% increase from the same quarter a year prior. Oil volumes averaged 70,669 bbl/d, a 45% increase from the second quarter in 2018 and up 9% sequentially, the report stated.
Cimarex added more Permian Basin assets through its acquisition of Resolute Energy Corp. in March in a deal valued at $1.6 billion, including debt.
In August 2018, Cimarex sold oil and gas properties principally located in Ward County, Texas, for $544.5 million to Callon Petroleum, according to a company press release. Production from these properties was reported at approximately 6,831 boe/d (73% oil) and was mostly from the Bone Spring Formation. The undeveloped acreage included 18,925 net Wolfcamp acres of which 11,500 net acres had rights to the base of the Wolfcamp, according to the release.
Editor's note: View updates from the company here.
Concho Resources
In July 2018, Concho acquired RSP Permian Inc. in a $9.5 billion merger. “The transaction created the largest unconventional shale producer in the Permian Basin,” according to a company press release.
Concho’s second-quarter 2019 production was approximately 30 MMboe, or an average of 329,000 boe/d, according to the company’s second-quarter 2019 results report. Average oil production totaled 206,000 bbl/d, natural gas production totaled 737 MMcf/d and the company averaged 26 rigs during the second quarter. As of July 31, the company was running 18 rigs, including 11 rigs in the Delaware Basin and seven rigs in the Midland Basin, and utilizing seven completion crews.
In July Concho Resources Inc. and Solaris Water Midstream LLC formed a joint venture focused on “optimizing produced water logistics at scale in the Northern Delaware Basin,” a press release stated. “Under the terms of the agreement, Solaris Water will manage Concho’s produced water gathering, transportation, disposal and recycling for an area covering approximately 1.6 million acres located primarily in Eddy County, N.M. Concho will contribute 13 saltwater disposal wells and approximately 40 miles of large-diameter produced water gathering pipelines in exchange for cash and an equity ownership in Solaris Midstream Holdings LLC, the parent of Solaris Water.”
Editor's note: View updates from the company here.
ConocoPhillips
ConocoPhillips holds about 800,000 net acres in the Permian Basin, which includes 87,000 net acres in the Delaware Basin and 58,000 unconventional net acres in the Midland Basin.
In 2018 ConocoPhillips reported average total net production of 38,000 boe/d, which included 21,000 bbl/d of crude oil, 5,000 bbl/d of NGL and 77 MMcf/d of natural gas, for its conventional Permian assets, according to a March 2019 company fact sheet. The company also reported 2018 average total daily net production of 28,000 boe/d, which included 14,000 bbl/d of crude oil, 6,000 bbl/d of NGL and 49 MMcf/d of natural gas, for its unconventional Permian assets. The company brought 36 operated wells online in 2018.
According to COO Matt Fox, the company’s Permian assets are considered early in their life cycle with significant growth ahead. He said it will be several years before the company reaches a plateau there but has a rigorous approach to development in the area.
“We will be, over time, increasing our activity in the Permian as we move from the mode we’re in just now, which is essentially making sure that we’re optimizing the well spacing and stacking and the order of which we tackle the various zones that exist within our Permian acreage. Once we’ve got that completed, then we’ll increase to more sustainable rig count there to build toward [the] plateau,” Fox said during the company’s second-quarter 2019 earnings call.
Editor's note: View updates from the company here.
Devon Energy Corp.
Devon Energy’s operations in the Delaware Basin of West Texas and southeast New Mexico provide both oil and natural gas production from its core acreage position consisting of 280,000 net acres across multiple formations. The company’s current focus is in the oil-rich Wolfcamp, Bone Spring, Leonard and Delaware formations.
In 2018 the company reported net production of 75,000 boe/d (77% liquids) and 249 MMboe reserves in the Delaware Basin. Last year Devon sold 9,600 net acres of noncore Delaware Basin acreage in Ward and Reeves County to Carrizo Oil and Gas for $215 million, a press release stated.
According to the company’s first- and second-quarter 2019 results reports, Devon’s “strongest asset-level performance” for the quarters was achieved by its Delaware Basin operations in southeast New Mexico. In the second quarter, production from this play increased 58% year over year, driving volumes in the Delaware Basin to 120,000 boe/d. A key growth driver was 28 new wells brought online in the state-line area that averaged initial 30-day rates of approximately 2,100 boe/d per well, of which 70% was oil, according to the second-quarter report.
Editor's note: View updates from the company here.
Diamondback Energy Inc.
Diamondback Energy is a pure-play Permian Basin operator with second-quarter 2019 production that averaged 280,400 boe/d (68% oil), up 149% year over year from 112,600 boe/d in the second quarter of 2018, according to the company’s second-quarter 2019 results report.
In the first half of the year, Diamondback drilled 172 gross horizontal wells and turned 151 operated horizontal wells to production.
In the second quarter, Diamondback drilled 89 gross horizontal wells and turned 69 operated horizontal wells to production, according to the report. Diamondback expects full-year 2019 guidance for average production to be between 277,000 boe/d to 284,000 boe/d, according to the report.
In November 2018, Diamondback acquired Energen Corp., which nearly doubled the company’s core acreage position, in an all-stock transaction valued at about $9.2 billion, company press releases stated.
Diamondback also acquired Ajax Resources last year in a transaction valued at about $1.25 billion. This deal also increased Diamondback’s Permian drilling inventory.
Editor's note: View updates from the company here.
Encana Corp.
Encana’s second-quarter 2019 production in the Permian Basin averaged a record 104,000 boe/d (84% liquids).
“Encana continues to demonstrate efficiency gains with its four-rig program focused on cube development,” the company stated in its second-quarter 2019 results report. “A recent 14-well pad in Martin County, Texas, commenced production and is averaging 14,900 bbl/d after 90 days.”
This year the company plans to focus 75% of its activity in the Midland, Martin and Upton counties of the Permian Basin, according to the company’s corporate presentation released in August. Encana’s fiscal year 2019 plans in the Permian include having 105 to 120 net wells drilled and onstream.
In February Encana acquired Newfield Exploration Co. in an all-stock transaction valued at about $5.5 billion.
Editor's note: View updates from the company here.
Endeavor Energy Resources LP
Endeavor Energy Resources LP is a private E&P company with more than 370,000 net acres in the Midland Basin. More than 95% of that total gross acreage is HBP. According to the company, it holds among the largest land positions in the Midland Basin.
The company reported record average net production of approximately 111,800 boe/d (73% oil) during the second quarter, a 60% increase from the average net production of approximately 69,800 boe/d (70% oil) for the same quarter the year prior, according to Endeavor’s second-quarter 2019 operating results report. Endeavor placed 38 gross operated horizontal wells on production during the second quarter, achieving an average 30-day IP rate of 1,141 boe/d (78% oil).
Editor's note: View updates from the company here.
EOG Resources Inc.
EOG Resources reported a 7,050 boe/d gross 30-day average IP rate in the Delaware Basin in the second quarter of 2019. Crude oil and condensate totaled 1,950 bbl/d in the Wolfcamp, 1,300 bbl/d in the Bone Spring and 1,200 bbl/d in the Leonard Shale, according to the company’s second-quarter 2019 results report. NGL totaled 450 bbl/d in the Wolfcamp, 300 bbl/d in the Bone Spring and 600 bbl/d in the Leonard Shale in the second quarter. In addition, natural gas was reported at 2.9 MMcf/d in the Wolfcamp, 1.6 MMcf/d in the Bone Spring and 3.1 MMcf/d in Leonard.
EOG Resources brought online 63 gross (57 net) wells in the Wolfcamp, five gross (five net) wells in the Bone Spring and three gross (three net) wells in the Leonard Shale during the second quarter.
According to Hart Energy’s “Top 12 IP Wells in the Permian Basin” released in August, seven of EOG’s Wolfcamp wells made the list (data for the list were gathered from IHS).
Editor's note: View updates from the company here.
Matador Resources Co.
Matador Resources’ operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in southeast New Mexico and West Texas.
During the second quarter of 2019, Matador focused on the exploration, delineation and development of its Delaware Basin acreage position in Loving County, Texas, and Lea and Eddy counties in New Mexico, according to the company’s second-quarter 2019 results report. Matador is operating six drilling rigs in the Delaware Basin. Delaware Basin average oil production increased 3% sequentially to 32,800 bbl/d, and Delaware Basin average natural gas production decreased 8% sequentially to 113.5 MMcf/d, each as compared to the first quarter of 2019, the report stated.
For the remainder of the year, Matador expects to continue operating only six drilling rigs in the Delaware Basin and has no plans to add a seventh rig to its 2019 drilling program.
Editor's note: View updates from the company here.
Mewbourne Oil Co.
Headquartered in Tyler, Texas, Mewbourne Oil Co. develops oil and natural gas prospects, acquires leasehold interests and serves as the operator in the drilling, completion and production of oil and natural gas wells. Focusing on the Anadarko and Permian basins, the company operates more than 2,300 wells.
“Mewbourne has become the largest privately owned oil producer in America and the largest private producer in the Permian,” according to the company. In the second quarter of 2019, Mewbourne averaged approximately 80,000 bbl/d of oil and 300 MMcf/d in the Permian. The company has nine rigs running in southeast New Mexico.
Editor's note: View more about the company here.
Occidental
Occidental is the leading producer in the Permian Basin, following its acquisition of Anadarko in August. The company has operations focused on the Delaware and Midland basins as well as the Central Basin Platform. Occidental manages operations in the Permian Basin through two complementary businesses: Permian Resources, which consists of growth-oriented unconventional opportunities, and Permian Enhanced Oil Recovery (EOR), which uses EOR techniques, such as CO2 flooding and waterfloods.
Occidental is the largest injector of CO2 for EOR in the Permian, a method that can increase oil recovery by 10% to 25%, according to the company. Occidental is advancing CO2 EOR as a form of carbon capture, utilization and sequestration, a process that has the potential to reduce greenhouse-gas emissions. Occidental stores 18 MMtons of CO2 per year in its operations.
Pre-acquisition, Permian Resources’ average production volumes exceeded guidance at 289,000 boe/d for the second quarter of 2019, an increase of 11% from the prior quarter due to improved well performance and development activity, according to Occidental’s second-quarter 2019 earnings release. The business delivered 26 of the top 100 wells while only drilling 7% of wells in the Delaware Basin, the report stated. Year-over-year Permian Resources’ production for the second quarter of 2019 increased by 44%.
On July 31, Occidental and Ecopetrol announced a joint venture to develop 97,000 net acres of Occidental’s Midland Basin properties, allowing Occidental to accelerate its development plans while maintaining operatorship, the report stated. The transaction is expected to close in the fourth quarter.
Editor's note: View updates from the company here.
Parsley Energy Inc.
Parsley Energy Inc. is an independent oil and natural gas company focused on the acquisition, development, exploration and production of unconventional oil and natural gas properties in the Permian Basin.
Net oil production increased 10% from the first quarter to the second quarter of 2019 and increased 28% year over year to 86,600 bbl/d of oil, according to Parsley’s second-quarter 2019 results report. During the second quarter, total net production averaged 140,100 boe/d, and the company spudded 41 wells and placed 39 gross operated horizontal wells on production (33 in the Midland Basin and six in the Delaware Basin). “Parsley expects that development activity will remain weighted to the Midland Basin for the remainder of the year,” the report stated.
Looking ahead, Parsley plans to run a maximum of 11 development rigs and three to four frac spreads for the rest of the year. The company also increased its full-year 2019 net oil production guidance to between 85,000 bbl/d and 86,500 bbl/d of oil, the report stated.
Editor's note: View updates from the company here.
Pioneer Natural Resources
Pioneer Natural Resources is a Permian pure-play company headquartered in Dallas, Texas.
Second-quarter 2019 Permian production averaged 330,000 boe/d and oil production averaged 206,000 bbl/d, according to the company’s second-quarter 2019 results report.
The company plans to operate an average of 21 to 23 horizontal rigs in the Permian Basin this year. This program is expected to place 265 to 290 wells on production. This activity level is projected to deliver 2019 Permian production of 320,000 to 335,000 boe/d and 203,000 to 213,000 bbl/d of oil, representing approximately 12% to 17% growth over 2018 production levels, the report stated.
Editor's note: View updates from the company here.
Shell
Since Shell reentered the Permian Basin in 2012, it has high-graded its acreage, simplified the business, reduced costs and rapidly deployed technology to improve safety and increase production, according to the company. Shell operates in the Delaware Basin and is located in Loving, Ward, Winkler and Reeves counties. The company has interest in more than 500,000 acres (260,000 net acres) in the Delaware Basin with a focus on the Wolfcamp, Bone Springs and Avalon formations. Shell has more than 1,300 operated and nonoperated wells in the Permian, and production has increased to more than 120,000 boe/d in 2018 (operated and nonoperated).
Editor's note: View updates from the company here.
WPX Energy Inc.
Independent energy producer WPX Energy has 130,000 net acres in the Permian’s Delaware Basin. The majority of this land is located in Loving County, Texas, and Eddy County, N.M. These assets have existing production from 10 benches in the Delaware play.
WPX’s Delaware production averaged 96,600 boe/d in the second quarter of 2019, which was 30% higher than 74,400 boe/d in the same period a year ago, according to the company’s second-quarter 2019 results report. Oil production of 46,400 bbl/d comprised 48% of second-quarter total Delaware production, and oil volumes were up 19% versus 39,100 bbl/d in the second quarter a year ago. WPX completed 16 Delaware wells during the second quarter, according to the report.
The company had 5.6 rigs operating in the Delaware during the first half of the year and plans to have five rigs operating in the second half of the year.
Editor's note: View updates from the company here.
Check out the other "2019 Permian Playbook" chapters that appeared in the October issue of E&P magazine:
OVERVIEW:
Produced Water, Well Interference Challenge Growth in the Permian Basin
KEY PLAYERS:
Permian Operators Delivering Strong Production
TECHNOLOGY:
New Technology Primed and Prepped For Permian Challenge
MIDSTREAM:
Long-Haul Capacity from the Permian Close to Pulling Even with Production
Changing Paradigm of the Permian
PRODUCTION FORECAST:
Permian Poised to Deliver Strong Oil and Gas Production Growth
CASE STUDIES:
Producing Unconventional Wells without Electricity
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