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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 $4.275 billion on three companies in the Midland Basin, all backed by EnCap Investments.
Endeavor Energy Partners, another key player, is doing well in the Midland Basin's central area. According to a Fitch Ratings report from November, they're producing 331,000 barrels of oil equivalent per day, which is a 25% increase from 2022.
Permian Basin Rigs 2023
In the Permian Basin, there was a shift in drilling rigs during 2023: the Delaware Basin lost 3 rigs while the Midland Basin gained 1. The total U.S. rig count remained unchanged week-over-week at 595 rigs. Specifically, Chevron, Permian Resources, and Matador Resources each removed one rig from the Delaware Basin, and Exxon Mobil added a rig in the Midland Basin.
Despite a decrease in rigs throughout the year, the Permian Basin's oil supply continued to rise. The overall rig activity in West Texas and New Mexico dropped by 49 rigs, a 14% decrease, ending the year with 302 rigs compared to 351 at the end of 2022. This was the lowest rig count since January 2022, when the basin's oil production was at 4,977 million barrels per day (Mb/d).
The decrease in rig counts was also influenced by M&A. Private operators saw the most significant decline, with a 33% reduction in their basin rig counts in 2023. Drilling activities by these private operators decreased by 17% in the Delaware Basin and 36% in the Midland Basin.
Permian Basin Infrastructure 2023
Despite these challenges, the Permian Basin's crude oil production increased by 10% in 2023, reaching a new record high. By the end of the year, oil production had risen to 6,185 Mb/d, up by 560 Mb/d from the end of 2022, when it was 5,625 Mb/d. This growth occurred even as rig activity trended downward, highlighting the basin's efficiency and productivity improvements.
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Top Permian Oil and Gas Producers: Five-Year Production
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/Top-Permian-Oil-and-Gas-Producers-Five-Year-Production.jpg)
OXY has been the leader in Permian Basin production for the past five years. Currently, the Houston-based oil and gas company is deepening its presence in the basin with a $12 billion acquisition of CrownRock, adding over 94,000 acres in the Midland Basin and increasing its oil output by about 170,000 barrels per day. Occidental announced an increase in its proved reserves to 4.0 billion barrels of oil equivalent by the end of December 2023, up from 3.8 billion the previous year. Activities in the Permian largely fueled this rise. Occidental added approximately 303 million barrels through infill development projects as well as new discoveries and the further development of existing fields brought in another 153 million barrels.
Oil and Gas: Diamondback and Endeavor's $26 Billion Merger Redefines Permian Basin
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/238_Blog_Oil and Gas_ Diamondback and Endeavor's $26 Billion Merger Redefines Permian Basin.png)
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