5 Companies Delivering Oil Growth from This Legacy Texas Oil Play
Sep 6th 2013 10:47AM
Updated Sep 6th 2013 10:48AM
The Permian Basin is one of America's most prolific oil basins. It has produced more than 29 billion barrels of oil since 1921. For perspective, that equates to the entire current proved oil reserves of the United States.
Last year, the Permian produced about 312 million barrels of oil, or about 14% of U.S. oil production. However, its best days might be ahead of it. Thanks to new drilling techniques, the oil industry is unlocking more oil all the time. In fact, oil production growth is expected to accelerate from a 7% annual rate over the passt five years to a 12% annual rate over the next five. That's driving tremendous production growth at the following five companies.
Over the past year Concho has grown its daily oil production by 22% thanks to its pure-play position in the Permian. The company is still trying to determine exactly how much growth lies ahead as it transitions to drilling horizontally in emerging areas like the Avalon, Bone Spring, Wolfcamp and Wolfberry. However, given its 630,000 net acres in the play, it should easily be able to continue delivering double digit production growth for a long time.
While its growth in the play isn't at as high a rate, Conoco still expects to grow its production in the Permian by 7% annually through 2017. However, that's just taking into account the company's conventional production from its legacy assets. Looking ahead, the company has over a million net acres in the region and at least 200,000 of those net acres are prospective for emerging unconventional areas like the Wolfcamp, Avalon and Bone Spring. As these plays are de-risked, it could enable Conoco to grow its production by an even greater future rate.
One company really thriving in the Permian is Devon. The company is expected to grow its oil production in the Basin by 40% this year, which is really fueling its push into becoming an oilier company. It has 1.3 million net acres in the basin, giving it several target areas to continue to drive oil production growth. With 1,500 new drilling locations identified in the last year alone, Devon has plenty of drilling inventory to keep its oil production growing.
Of the 1,500 operators in the Permian, Occidental is the largest producer at about 16% of the basin's total. More than half of its production is from enhanced oil recovery projects, which are designed to breathe new life into legacy oil wells. However, the company does have ample opportunity to tap the emerging areas of the play thanks to its 1.7 million net acres. Overall, the company believes it has another 2.5 billion barrels of recoverable oil equivalents in this legacy basin.
Pioneer Natural Resources
Few companies expect bigger things out of the Permian than Pioneer. The company, which has total proved reserves of 1.1 billion barrels of oil equivalent thinks that its total resource potential could be over nine billion barrels of oil equivalent thanks mainly to the Permian. The company sees the Spraberry/Wolfcamp formations of the play actually representing the second largest oil field in the world at about 50 billion barrels of oil equivalent, which is almost double the oil and gas that's estimated to be in the Eagle Ford shale.
Final Foolish thoughts
The Permian Basin is silently helping to transform America's energy position. While it doesn't get the attention of the Bakken or the Eagle Ford, it just might turn out to be America's most important oil basin. That's great news for the companies on this list which are enjoying this play's reemergence as a premier oil growth play.
The Permian is one of the many plays driving record oil and natural gas production that is revolutionizing the United States' energy position. For a closer look at three companies really positioned to benefit from America's energy revolution, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.
The article 5 Companies Delivering Oil Growth from This Legacy Texas Oil Play originally appeared on Fool.com.Fool contributor Matt DiLallo owns shares of ConocoPhillips. The Motley Fool owns shares of Devon Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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