The Permian basin in Texas looks set to kick-off a rebound in US shale drilling activities as key producers in the region such as Apache, Occidental and Concho make aggressive plans to step up output.
The Permian basin in Texas looks set to kick-off a rebound in US shale drilling activities as key producers in the region such as Apache, Occidental and Concho make aggressive plans to step up output.
Permian is bigger than the adjoining Eagle Ford area, which means more drilling opportunities, is close to the massive refining hub surrounding Houston and it saw a sharper pullback during the downturn – all making the basin prime for a rebound.
“No surprise that this is the first region to see several indications of increasing go forward activity,” investment bank Tudor Pickering Holt (TPH) said.
Apache’s chief executive John Christmann reorganized the company, creating three super regions to run operations. One of them will focus just on the Permian “to realize the exceptional potential of these unconventional assets,” it said.
Pioneer and Reliance Industries sold their Eagle Ford shale condensate and natural gas gathering joint venture for $2.15bn to Enterprise Products Partners. The sale will “allow us to strategically redeploy capital to our core, oil-rich Spraberry/Wolfcamp asset in the Permian,” Pioneer’s chief executive Scott Sheffield said.
Noble Energy will acquire Rosetta Resources for $3.9bn, gaining entry to the Eagle Ford and the Permian basin. “The Eagle Ford and the Permian are premier unconventional resource plays, two of the most economic in the US, which will expand our resource base and development inventory and further diversify our portfolio," chief executive Dave Stover said.
For Occidental, Permian growth remains key and “it sounds like the asset is firing on all cylinders,” TPH said in a separate note, after a meeting with chief executive Steve Chazen and incoming chief executive Vicki Hollub. “Continue to see Permian as a beat.”
Devon, which increased its output guidance by 25-35pc, is relying on the Delaware basin and the Eagle Ford. In Delaware, it is using a new design to increase production of the oil and gas it can ultimately recovery from each new well in the field by a third to 600,000 boe.
Similarly, Concho Resources is aiming to raise output by 20pc with less than half the number of rigs by betting on the Permian.
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