- Exxon's oil production per location increased approximately 25% from 2015 to 2016
- Exxon has shifted its development to Midland County, Texas, from McKenzie County, North Dakota
- Exxon seems more concerned with lateral length than enhanced completion designs, and this is probably why production hasn't improved more
- we believe there is further upside to XOM's well design in 2018
In summary, Exxon has been more focused on increasing lateral length. It has not been as active in North Dakota and has been ramping up in Texas.
We would have expected a greater increase in oil production per well due to the ramp-up in Midland County. That said, XOM still increased production per location by almost 25%. XOM's production per foot probably increases more than other operators next year. This provides interesting upside for Exxon with respect to its unconventional portfolio.
As it rolls out a design that better stimulates the source rock, production per foot improvements would be increased across a longer lateral length. It is just beginning to realize the economic benefits to the better geology in Texas. This also adds upside to a portfolio that can increase production relatively quickly. We expect costs to increase slightly in 2018 but also for revenues per location to more than offset. If oil prices continue to improve as expected, XOM will generate better returns in its US unconventional leasehold.This should not be surprising: Exxon has to start developing their new fields in the Permian.
Daily Activity Report
Five new permits:
- Operators: Petro Harvester (4); EOG
- Fields: Parshall (Mountrail): Flaxton (Burke County)
- Comments: Petro Harvester has permits for a 5-well FLX pad in SWNE 17-163N-90W
- BR: five Franklin permits in Dunn County
- Hess: an EN-Weyrauch C permit in Mountrail County