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TOP 2022 vs 2023 Permian Producers Overview by Rextag
02/28/2024
The Permian Basin, America's prime oil region, faced significant challenges during the COVID-19 pandemic. The industry saw a drastic reduction in rigs and fracking crews and had to close some operations as oil prices plummeted, leading to widespread restructuring.
Now, the Permian is making a strong comeback. Over the last three years, exploration and production companies (E&Ps) have increased their drilling activities. They're focusing on spending wisely and maximizing returns to their investors.
The Permian's role is crucial. It was projected to contribute over 5.98 million barrels of oil per day in December, making up about 62% of the total oil production in the Lower 48 states, as per the EIA.
This basin's vast resources continue to draw attention and investment from some of the biggest names in the industry, including giants like Exxon Mobil and Chevron.
Turn Back to 2022
The year 2022 brought new opportunities to the U.S. economy in various domains that had not been fully developed. Oil and natural gas production facilitated economic growth, especially in the Permian Basin.
Compared with other U.S. basins, the Permian Basin derived benefits from lower operational costs, better access to oilfield services, and its proximity to U.S. Gulf Coast refineries and export facilities. The core areas of the Permian Basin, including its Delaware and Midland sub-basins, consisted of multiple stacked shale formations.
According to the U.S. Energy Information Administration (EIA), oil output in the Permian in Texas and New Mexico, the largest U.S. shale oil basin, was predicted to grow by almost 50,000 barrels per day (bpd) to a record 5.453 million bpd in November 2022.
In 2022, the total production was 1.6 billion MCF for gas and 507 million BBL for oil. The monthly average production in the Permian Basin was 4,236 MCF for gas and 1,127 BBL for oil.
The list of the top 5 Permian producers included Pioneer, Windsor, EDG, OXY, and ExxonMobil.
Rextag`s info showing Top H1 2022 Permian Producers
At that time, OXY had the most significant number of wells (10,388) that were delivering steady production to domestic and foreign customers. Other top producers operated roughly twice as few wells (4,000-6,000).
In 2023, strong production growth from the Permian basin was anticipated, generating a first-half 2022 average crude oil production of 5.02 million b/d, a growth of 13.6% year-over-year. Constant supply chain bottlenecks, shortages of qualified personnel, and a fluctuating drilled-but-uncompleted (DUC) well inventory could have dampened overall expectations, but the play focused on many US shale operators.
TOP 2023 Permian Producers Update
In 2023, the Permian Basin made up 46% of the U.S.'s oil supply. Other tight oil areas contributed an additional 22%. The remaining 32% came from traditional and offshore oil sources, which haven't grown in the last 15 years.
In November 2023, the Permian Basin hit a new high in natural gas production, with an average flow of 6.3 billion cubic feet per day.
According to Wood Mackenzie, investments in the Permian Basin reached over $100 billion in 2023 (a previous high of $65 billion in 2019).
Rank |
Operator |
Average Q2 2023 Gross Operated Production (BOE/D) |
1 |
PIONEER NATURAL RESOURCES |
816,725.07 |
2 |
EOG RESOURCES |
656,222.61 |
3 |
CONOCOPHILLIPS |
606,318.73 |
4 |
OCCIDENTAL PETROLEUM |
586,244.26 |
5 |
EXXON |
583,679.87 |
6 |
DIAMONDBACK ENERGY |
496,397.16 |
7 |
DEVON ENERGY |
472,515.53 |
8 |
CHEVRON |
388,028.49 |
9 |
MEWBOURNE OIL CO |
363,613.05 |
10 |
ENDEAVOR ENERGY |
319,008.02 |
Top 10 Permian Basin Operators for Q2 2023
The merger between Exxon Mobil and Pioneer Natural Resources was valued at $60 billion and announced in October. Post-merger, Exxon Mobil's production in the Permian is expected to increase to around 1.3 million barrels of oil equivalent per day, positioning it as the top producer in the region.
Exxon Mobil has set a goal to expand its Permian production to 2 million barrels of oil equivalent per day by 2027, up from an initial target of 1 million.
Occidental Petroleum is also deepening its presence in the Permian with a $12 billion acquisition of CrownRock. In August 2023, OXY ranked as the third-largest producer in the Permian Basin.
In 2023, Civitas Resources made a step into the Permian Basin, investing nearly $7 billion. They entered by buying two companies, Tap Rock Resources and Hibernia Energy III, which are active in the Permian's Midland and Delaware areas.
Civitas didn't stop there; they also bought Vencer Energy, a company in the Midland Basin, for $2.1 billion in October. This company was supported by Vitol.
In another big deal in 2023, Permian Resources spent $4.5 billion to buy Earthstone Energy. This added valuable locations and increased their production in the Midland Basin.
Ovintiv also made a major purchase in the recent year, spending $4.275 billion on three companies in the Midland Basin, all backed by EnCap Investments.
Endeavor Energy Partners, another key player, is doing well in the Midland Basin's central area. According to a Fitch Ratings report from November, they're producing 331,000 barrels of oil equivalent per day, which is a 25% increase from 2022.
Permian Basin Rigs 2023
In the Permian Basin, there was a shift in drilling rigs during 2023: the Delaware Basin lost 3 rigs while the Midland Basin gained 1. The total U.S. rig count remained unchanged week-over-week at 595 rigs. Specifically, Chevron, Permian Resources, and Matador Resources each removed one rig from the Delaware Basin, and Exxon Mobil added a rig in the Midland Basin.
Despite a decrease in rigs throughout the year, the Permian Basin's oil supply continued to rise. The overall rig activity in West Texas and New Mexico dropped by 49 rigs, a 14% decrease, ending the year with 302 rigs compared to 351 at the end of 2022. This was the lowest rig count since January 2022, when the basin's oil production was at 4,977 million barrels per day (Mb/d).
The decrease in rig counts was also influenced by M&A. Private operators saw the most significant decline, with a 33% reduction in their basin rig counts in 2023. Drilling activities by these private operators decreased by 17% in the Delaware Basin and 36% in the Midland Basin.
Permian Basin Infrastructure 2023
Despite these challenges, the Permian Basin's crude oil production increased by 10% in 2023, reaching a new record high. By the end of the year, oil production had risen to 6,185 Mb/d, up by 560 Mb/d from the end of 2022, when it was 5,625 Mb/d. This growth occurred even as rig activity trended downward, highlighting the basin's efficiency and productivity improvements.
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Anticipated Growth: Endeavor Energy's Value Nearing $30 Billion
This summer, J.P. Morgan Securities highlighted Endeavor Energy Resources as the Midland Basin's standout in mergers and acquisitions, suggesting its value might approach $30 billion. Endeavor Energy Resources, a privately-owned entity in Midland focusing solely on its operations, has seen a significant uptick in production. It now boasts a production rate of 331,000 barrels of oil equivalent per day (boe/d), marking a 25% increase from the previous year.
Oil and Gas: Diamondback and Endeavor's $26 Billion Merger Redefines Permian Basin
Diamondback's buyout of Endeavor happened about four months after ExxonMobil and Chevron made huge deals, with Exxon buying Pioneer Natural Resources for $59 billion and Chevron getting Hess for $53 billion. Even though 2023 was a slow year for company buyouts and mergers, with the total deals at $3.2 trillion (the lowest since 2013 and 47% less than the $6 trillion peak in 2021), the energy sector was still active. Experts think this buzz in energy deals is because these companies made a lot of money in 2022.
TotalEnergies kicked off 2024 with a net income of $5.7 billion in the first quarter, marking a modest 3% increase from the same period last year and a 13% rise from the previous quarter. This growth occurred despite experiencing drops in both the volume and price of gas sales over the year and the quarter. Their adjusted net earnings, which exclude one-time or unusual items, were $5.1 billion. This represents a significant 22% decline compared to last year and a slight 2% drop from the last quarter. The company's earnings before tax, depreciation, and amortization reached $11.5 billion, while their cash flow from operations significantly decreased to $2.2 billion, falling by 58% from last year and a steep 87% from the previous quarter. TotalEnergies also recorded $644 million in impairments.
New Mexico leads the Rockies region in gas production and ranks as the sixth-largest in terms of active gas wells in the U.S. Last year, the state's gas well count slightly increased by 0.2% to 30,699, with new additions in both the northwestern San Juan Basin and the southeastern Permian Basin. Meanwhile, just to the north in Colorado, gas producers grew by a modest 0.1% to 30,322, primarily due to increased drilling activity in the DJ and Piceance basins. Wyoming saw a decline in its active gas wells by 3.7%, down to 17,006, with production mainly in Sublette, Sweetwater, and Converse counties reflecting stable or slightly reduced drilling activity. Utah also experienced a slight decrease of 0.2% in its number of gas wells, totaling 6,463. In Q1 2024, oil and gas industry activity in Oklahoma, Colorado, and northern New Mexico experienced a decline. This marks the fifth consecutive quarter of contraction in drilling and business activities within these regions. According to a survey that included responses from 33 firms operating in the Rockies, this downtrend is expected to continue over the next six months.
The Williston Basin is a big area filled with layers of rock that sits next to the Rocky Mountains in western North Dakota, eastern Montana, and the southern part of Saskatchewan in Canada. This area covers roughly 110,000 square miles. Geologically, it's very similar to the Alberta Basin in Canada. People started drilling for oil in the Williston Basin back in 1936, and by 1954, most of the land where oil could likely be found was already claimed for drilling. The Bakken Formation with parts of Montana, North Dakota, Saskatchewan, and Manitoba has become one of only ten oil fields globally to yield over 1 million barrels per day (bpd) since the late 2000s. It is currently the third-largest U.S. shale oilfield, behind the Permian and Eagle Ford. The boom in the Bakken started around September 2008, coinciding with the U.S. housing market crash. The application of new technologies, such as swell packers enabling multiple-stage fracturing, significantly enhanced oil recovery, making the Bakken Formation a key player in the U.S. In 2022, the Bakken oil field saw big improvements in how much oil and gas it could produce. At the start of the year, 27 drilling rigs were working there, more than double the 11 rigs from the start of 2021. Important upgrades included making the Tioga Gas Plant able to process 150 million cubic feet more gas each day, and making the Dakota Access Pipeline bigger, increasing its oil transport capacity from 570,000 to 750,000 barrels every day.