Why the Permian is the Next Hot Investment
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Why the Permian is the Next Hot Investment

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While the Eagle Ford and the Bakken were traditional hotspots in oil production growth, the Permian could dwarf them both in the next five years.

While the Eagle Ford and the Bakken were traditional hotspots in oil production growth, the Permian could dwarf them both in the next five years.

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  • http://www.rrc.state.tx.us/oil-gas/major-oil-gas-formations/permian-basin/
  • http://www.ogj.com/articles/uogr/print/volume-2/issue-3/permian-operators-increasingly-target-shale-as-new-technology-rejuvenates-legacy-oil-field.html <br /> http://www.rrc.state.tx.us/oil-gas/major-oil-gas-formations/permian-basin/ <br />
  • http://www.ogj.com/articles/uogr/print/volume-2/issue-3/permian-operators-increasingly-target-shale-as-new-technology-rejuvenates-legacy-oil-field.html <br />
  • http://www.ogj.com/articles/uogr/print/volume-2/issue-3/permian-operators-increasingly-target-shale-as-new-technology-rejuvenates-legacy-oil-field.html <br /> http://www.eia.gov/todayinenergy/detail.cfm?id=16291 <br /> Drilling Productivity Report June 2014 - http://www.eia.gov/petroleum/drilling/ <br />
  • http://www.ogj.com/articles/uogr/print/volume-2/issue-3/permian-operators-increasingly-target-shale-as-new-technology-rejuvenates-legacy-oil-field.html <br /> http://www.rrc.state.tx.us/oil-gas/major-oil-gas-formations/permian-basin/ <br />
  • http://www.ogj.com/articles/uogr/print/volume-2/issue-3/permian-operators-increasingly-target-shale-as-new-technology-rejuvenates-legacy-oil-field.html <br />
  • http://www.ogj.com/articles/uogr/print/volume-2/issue-3/permian-operators-increasingly-target-shale-as-new-technology-rejuvenates-legacy-oil-field.html <br /> http://www.rrc.state.tx.us/oil-gas/major-oil-gas-formations/permian-basin/ <br />
  • http://pbpa.info/education-center/oil-and-gas-101/drilling-and-leasing/spraberry-formation/
  • http://pbpa.info/education-center/oil-and-gas-101/drilling-and-leasing/spraberry-formation/ <br /> http://www.pxd.com/operations/permian-basin
  • http://pbpa.info/education-center/oil-and-gas-101/drilling-and-leasing/spraberry-formation/ <br /> Company filings
  • http://www.ogj.com/articles/uogr/print/volume-1/issue-3/urtec-wolfcamp/wolfcamp-shale-graduates-to-world-class-play.html <br /> http://www.ogj.com/articles/uogr/print/volume-2/issue-3/permian-operators-increasingly-target-shale-as-new-technology-rejuvenates-legacy-oil-field.html
  • http://www.ogj.com/articles/uogr/print/volume-1/issue-3/urtec-wolfcamp/wolfcamp-shale-graduates-to-world-class-play.html
  • http://www.worldoil.com/Pioneer-delivers-record-production-from-Spraberry-Wolfcamp-shale-in-Midland-basin.html <br /> http://www.naturalgasintel.com/articles/98080-athlon-production-beats-guidance-as-wolfcamp-wells-howl <br /> http://ir.energen.com/phoenix.zhtml?c=94826&p=irol-newsArticle&ID=1899198 <br /> <br />
  • http://www.ogj.com/articles/uogr/print/volume-2/issue-3/permian-operators-increasingly-target-shale-as-new-technology-rejuvenates-legacy-oil-field.html <br /> http://www.rrc.state.tx.us/oil-gas/major-oil-gas-formations/permian-basin/ <br />
  • http://pbpa.info/education-center/oil-and-gas-101/drilling-and-leasing/spraberry-formation/ <br /> Company filings
  • http://www.howardweil.com/docs/Reports/OtherReports/PermianBasin01-27-14.pdf <br />
  • Drilling productivity report June 2014 - http://www.eia.gov/petroleum/drilling/#tabs-summary-2 <br /> <br />
  • http://info.drillinginfo.com/general-overview-of-permian-strata-of-the-delaware-basin-and-nw-shelf/

Why the Permian is the Next Hot Investment Why the Permian is the Next Hot Investment Presentation Transcript

  • Why the Permian Is the Next Hot Investment
  • The Permian Basin: One of the oldest oil fields • The Permian Basin is located in west Texas and the adjoining southeastern New Mexico. • About 29 billion barrels of oil and 75 trillion cubic feet of natural gas produced since 1921. Photo credit: Railroad Commission of Texas
  • • Conventional vertical wells still account for more than 80% of production in the Permian. • However energy research firm Wood Mackenzie says horizontal drilling is fast becoming the main driver of production growth. • Industry experts estimate recoverable oil and natural gas resources exceed what has been produced over the last 90 years! But a paradigm shift is underway…
  • …as focus shifts to horizontal drilling. • In 2013, production from horizontal wells grew by 119% to 375,000 Boe/d. • In the same period, output from vertical wells increased only 2%. • Modern technology and $90/bbl crude oil prices motivate horizontal drilling. Photo credit: Flickr/Nicholas A. Tonelli
  • • Stacked pay horizons and thick oily reservoirs discovered in the three sub-basins: Delaware Basin, Midland Basin, Central Basin Platform. • The Spraberry, Wolfcamp and the Bone Spring shale formations are the most prolific. • As a result, rig-count in the Permian up by 15.2% in 2014, the highest growth across any oil producing region in the United States. Permian Basin rig-count at 7-year highs
  • Horizontal rigs make up for almost half the total… Photo credit: Pioneer Natural Resources/Investor Relations
  • …as previously uneconomical fields open up. • Last year, 55% of capital spending in the Permian Basin directed to horizontal drilling. • In 2012, horizontal development accounted for only 22% of capital spending – a substantial development. Photo credit: Occidental Petroleum/Investor Relations
  • Photo credit: Pioneer Natural Resources/Investor Relations Stacked pay horizons in the Midland Basin
  • • Once dubbed the “Largest Uneconomic Oil Producing Play in the World”. • Formation is mostly made up of “Spraberry Sand”, a sand that makes oil recovery difficult. • The rock is naturally fractured. The Spraberry formation: A huge oil reservoir Photo credit: Flickr/Paul Lowry
  • • The Spraberry formation has already produced more than one billion barrels of oil. • Pioneer Resources estimates net resource potential of more than 8 billion barrels of oil equivalent. Photo credit: Flickr/Department of Energy and Climate Change The Spraberry formation: A huge oil reservoir
  • • Pioneer Natural Resources (NYSE: PXD) • Occidental Petroleum (NYSE: OXY) • Apache Corp. (NYSE: APA) Major Operators in the Spraberry The Spraberry formation: A huge oil reservoir Data by YCharts
  • • Comprises four benches: A, B, C & D. • A & B correspond to the Upper and Middle Wolfcamp. • C is identified as the Lower Wolfcamp. • The D bench is referred to as the Cline shale. Photo credit: Pioneer Natural Resources/Investor Relations The Wolfcamp: Among the most prolific fields
  • • Most drilling is focused on the Wolfcamp B. • But Wolfcamp A and D are picking up. • In 2013, Pioneer Resources drilled several successful appraisal wells. • Total thickness: ~2,000 feet Photo credit: Flickr/Martin Lopatka The Wolfcamp: Rapid development ahead
  • Well Lateral Location Company IP Rate Remarks Oil content University 7-43 10H Wolfcamp D Pioneer Resources 3,065 Boe/d 24-hr peak IP rate 74% E.T. O’Daniel #1H Wolfcamp B Pioneer Resources 2,801 Boe/d 24-hr peak IP rate 75% University 2-20 #12 Upper Wolfcamp B Pioneer Resources 3,176 Boe/d 24-hr peak IP rate 83% Abel 18 #3H Wolfcamp A Athlon Energy 1,364 Boe/d 24-hr peak IP rate 89% Lawson #2703H Wolfcamp A Athlon Energy 1,069 Boe/d 24-hr peak IP rate 81% Winchester 57-10 #1H Wolfcamp B Energen Corp. 2,387 Boe/d 24-hr peak IP rate N/A Typical Wolfcamp well results Source: Company filings
  • Total Wolfberry potential: 75 million barrels! Photo credit: Pioneer Natural Resources/Investor Relations
  • • Pioneer Natural Resources (NYSE: PXD) • Apache Corp. (NYSE: APA) • Concho Resources (NYSE: CXO) • Cimarex Energy (NYSE: XEC) Major Operators in the Wolfcamp The Wolfcamp: Rapid development ahead Data by YCharts
  • • The Bone Spring is the most productive and highly drilled formation in the Delaware Basin. • Formation is divided into 1st, 2nd, & 3rd Bone Spring sands. • Gross thickness of column: 2,500 – 3,000 feet. Photo credit: Flickr/Charles Henry The Bone Spring: Grossing the highest returns
  • Bone Spring well results for Concho Resources “Production from new wells in the Permian offsets legacy production declines. According to the Energy Information Administration, July is forecasted to witness a 23,000 bbl/day net increase in oil production over June.” Location Well Count 30-day average IP rate 24-hour peak IP rate Avalon 56 690 Boe/d 1,251 Boe/d 1st Bone Spring 12 499 Boe/d 989 Boe/d 2nd Bone Spring 152 856 Boe/d 1,377 Boe/d 3rd Bone Spring 34 666 Boe/d 1,047 Boe/d Concho Resources/Investor Relations
  • • Anadarko Petroleum (NYSE: APC) • Concho Resources (NYSE: CXO) • EOG Resources (NYSE: EOG) • Devon (NYSE: DVN) Major Operators in the Bone Spring The Bone Spring: Driving production growth Data by YCharts
  • The investment IRS is daring you to make