Chevron’s deals, ranging from large-scale joint ventures to small deals where it has leased land to other operators, give it a share of the oil its partners produce.
They also provide data from thousands of wells stretching back years, allowing Chevron to hone drilling strategies. In return, partners get access to areas adjacent to their wells and pipelines, reducing their costs.
Shale drilling has helped the United States reverse decades of declines in output to become the world’s largest oil producer and all the major U.S. oil companies have jumped on the shale bandwagon to boost their own production.
Occidental outbid Chevron for Anadarko Petroleum in a takeover battle this year, spending $38 billion and vowing to use its technology to squeeze more oil from the deal which gave it a combined 3 million Permian acres.
Exxon, meanwhile, spent $6.6 billion two years ago to buy more Permian land and is now running nearly three times more rigs than Chevron in a race to reach its target of producing 1 million bpd of shale by 2024.
But Chevron has two key advantages: it holds 2.2 million Permian acres, second only to the Occidental-Anadarko trove, and it owns mineral rights on much of its land so it doesn’t pay the 20%-25% production royalties most rivals face.