Bloomberg: Exxon Aims for $15-a-Barrel Costs in Giant Permian Operation
If I had a nickel for every XOM/Permian story published this week I’d have at least a buck.
Development, operating and land acquisition costs will be “in and around $15 a barrel,” he said on the sidelines of the CERAWeek Conference by IHS Markit in Houston. West Texas Intermediate futures traded at almost $59 on Thursday. “The way we are approaching it is very unique compared to most, if not really everybody out there, as far as the scale,” he said.
Exxon plans to deploy 55 rigs in the Permian this year, by far the most of any driller, as it aims to increase output in the region fivefold to about 1 million barrels a day by 2024. Its strategy also includes building its own takeaway infrastructure from separation tanks to pipelines, and it’s even joining a giant conduit project to make sure its oil doesn’t get stuck in bottlenecks that have depressed prices in West Texas.
Exxon’s Permian expansion pits it against U.S. rival Chevron Corp., which is also aiming for strong growth there. The San Ramon, California-based company announced plans last week for 900,000 barrels a day by 2023. Royal Dutch Shell Plc is “actively looking” for deals to bulk up its Permian operations, Wael Sawan, the company’s upstream director-in-waiting said this week. Even so, its production will increase about 30 percent a year.
2 thoughts on “XOM Shooting for $15”
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You know what happens when there are too many drillers? There is too much oil produced. When there is too much oil produced, the price goes down. When the price drops, the drillers don’t make as much money. Which means they don’t use as much water, and they don’t lease more land. Moreover, OPEC starts to think they are not going to limit production, and the price drops some more. So don’t think it’s great to drill, drill, drill. More like slow and steady wins the race.
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