Permian acreage positions don’t tell the whole story
Companies continue to race into the Permian, jockeying for acreage and buying up increasing positions in the world’s most popular unconventional basin.
The Permian is an oil basin that has produced almost a century as a conventional play and now that the shale phenomenon has found the Permian, recent estimates say the Permian rivals Saudi Arabia’s legendary Ghawar field for remaining recoverable resources.
Exxon adds Permian acreage
Most recently, ExxonMobil (ticker: XOM) announced that it has added to its position in a series of transactions and trades. In total, this has given Exxon an additional 22,000 acres in the Delaware and Midland basins.
ExxonMobil jumped into the Delaware in a big way earlier in 2017 with its $6.6 billion acquisition of Bass family acreage in February. In the Midland, the company reports that it has doubled its core operated acreage to more than 130,000 acres in multiple transactions over the past few years.
ExxonMobil is one of the most active Permian operators, with 19 drilling rigs. The company reports that 14 of these are operating in the Midland basin, and four are currently drilling in the New Mexico portion of the Delaware.
566 companies hold Permian acreage
This map, from PLS’s M&A Database, shows PLS’s compilation of the acreage positions companies hold in the Permian.
In plain terms, acreage holdings are a fractured mess, with a total of 566 different companies owning land positions. It is likely that moves like Exxon’s will continue in the future, as companies attempt to consolidate their positions.
Consolidation allows companies to take advantage of the savings brought on by large-scale activities. For example, large contiguous acreage positions can support longer laterals, improving economics. Centralized infrastructure also becomes possible, reducing the complexities of development.
With acreage and potential drilling locations spread among players, permitting activity tells the story
There is a race to develop the Permian, with companies rushing to build a sizeable acreage positions and develop it. Some of the most important players have truly massive positions, and the drilling programs to match. However, large acreage holdings do not guarantee extensive operations.
ConocoPhillips (ticker: COP), for example, owns about 1 million acres in the Permian region, an undoubtedly large position. However, the company has not developed its acreage as extensively as some others, and has only received 734 drilling permits from the Texas Railroad Commission in the past six years.
Birmingham, Ala.-based Energen Corporation (ticker: EGN), by contrast, currently owns just under 150,000 acres, but has received more than double the amount of permits Conoco has received.
|
Company |
Acreage Holdings |
Drilling Permits Approved 2012-Present |
| Apache | 3,100,000 | 3,381 |
| Oxy | 2,500,000 | 4,003 |
| Chevron | 2,000,000 | 1,183 |
| ConocoPhillips | 1,000,000 | 734 |
| Pioneer | 800,000 | 3,110 |
| EOG | 795,000 | 824 |
| ExxonMobil | 402,000 | 1,872 |
| Energen | 147,428 | 1,647 |
Based strictly on total acreage holdings and permitting activity, Apache (ticker: APA) and Occidental Petroleum (ticker: OXY) are the kings of the Permian. These companies both hold at least 2.5 million acres in the basin, and have received more than 3,300 permits each since 2012. Pioneer Natural Resources (ticker: PXD) is the only company close to Oxy for permits received, with more than 3,100.
ConocoPhillips
ConocoPhillips (ticker: COP) said it now operates more than 5,000 wells in the basin, and in 2016, net production from conventional and unconventional wells was 64 MBOEPD.
COP says its legacy leasehold position consists of approximately 1.0 million net acres, containing more than one billion barrels of oil equivalent, and its acreage in the Permian basin includes approximately 123,500 net unconventional acres.
Chevron
Chevron (ticker: CVX) characterizes the Permian basin as an “American energy powerhouse.” Chevron said that in 2011, it produced its 5 billionth barrel from the Permian.
“Today we are among the largest producers of oil and natural gas in the basin, and with approximately 2 million net acres of resources, Chevron is the Permian Basin’s largest net acreage holder,” Chevron says.
Chevron tallied its 2016 estimated potentially recoverable reserves from the Permian at 9 billion barrels of oil equivalent. Chevron says its daily Permian production includes 90,000 net barrels of crude oil, 327 million cubic feet of natural gas and 29,000 barrels of natural gas liquids as of 2016.
Occidental
