Chevron And The Permian -- For The Archives -- April 6, 2015

For the archives.

There's a long story over at PermianShale.com on Chevron and the Permian.

Much of the Permian Basin’s oil boom eluded the world’s supermajor oil companies like Chevron, who took their corporate offices and large management teams from the area in the 1990s as common perception held the region was slowly dying.

But during this downturn, the supermajors see opportunity again in the Permian Basin. Chevron, and to a lesser extent Exxon Mobil, plan to pursue aggressive drilling and completion programs this year.

In the short-term, that offers some relief for the oil service companies and rig crews hammered by oil prices hovering below $50 per barrel. But it also reflects a long-term belief in the promise of the Permian Basin by some of the biggest companies in the world.

Executives of Chevron, which has a market capitalization of nearly $200 billion, see the region as a “Top 5 asset” in the world.

And so Chevron, like Exxon, plans to not scale back drilling this year even as many of the independents who cut capital budgets in a range of about 25 to about 60 percent.
“It’s true in the Permian Basin, that’s probably the No. 1 focus for both of them in 2015,” said Ben Shattuck, an analyst with the firm Wood Mackenzie in Houston. “They are not dropping rigs like everybody else, and at the same time for them, there is a lot of optionality. The reality is that it is not a huge component of their portfolios, but it is something they would like to take advantage of and wrap their minds around.”

Chevron has about 25 rigs running in the region and expects to keep about that many going throughout the year. Executives plan fewer wells, about 375 compared to the 550 last year. But more of these wells will be horizontal, more expensive and higher producing.

The goal set by executives is to boost Permian Basin production to 250,000 barrels per day by 2020 from about 100,000 barrels per day last year.

During the boom, Chevron also scooped up more property, including about 246,000 net leasehold acres acquired from Chesapeake Energy in 2012. By the middle of last year, less than half of Chevron’s acreage was developed.