It's no secret that oil and gas production has been surging in Texas. Companies such as EOG Resources Inc (NYSE:EOG), Anadarko Petroleum Corporation (NYSE:APC) and Apache Corporation (NYSE:APA) have been leading the charge. Thanks to the success of these companies, the Lone Star State's rainy day fund has never been richer.
In fact, the pot that is more formally known as the Economic Stabilization Fund now holds more than $14 billion. It is only expected to grow bigger in the future thanks to taxes from increased production. This past year the state collected a record $4.3 billion in severance taxes from oil and gas development, of which $2.5 billion will be deposited in the bailout fund per state law.
If predictions from state Railroad Commission Chairman Barry Smitherman prove true, annual deposits to the fund could eventually surpass $6 billion per year. That's because he sees oil and gas production in the state tripling as drilling permit applications rise to levels not seen in nearly 30 years.
Production gusher One of the companies fueling the recent rise in Texas' oil production is EOG Resources, which is the largest producer in the Eagle Ford shale. It doesn't see oil production slowing down either. Instead, EOG anticipates best-in-class oil production growth through 2017 as it continues to develop the Eagle Ford, as well as its emerging opportunities in the Delaware Basin. At its current rate, EOG Resources has more than a dozen years' worth of drilling inventory in the Eagle Ford and decades more in the Delaware Basin.
Apache tells a similar story of future production growth. It's currently the No. 1 driller in the Permian Basin, but it sees an even more impressive future out of that play. One of the reasons for this is its vast reserve potential. Apache has proven reserves of 812 million barrels of oil equivalent. However, it estimates additional unproven resources upward of 4.1 billion barrels of oil equivalent. This has led Apache to increase its investment in the play, up sixfold since 2010 alone. As Apache continues to grow production some of that cash flow will to spill into Texas' rainy day fund.
Anadarko Petroleum also has made a big impact on Texas' oil and gas production, as well as its stabilization fund. This year alone the company will drill more than 500 wells in the state, in locations including the Eagle Ford, Permian Basin, and East Texas. In the Eagle Ford alone Anadarko has grown sales by a 100% compound annual rate since 2009. While its rate is likely to slow over time, that's only due to the law of large numbers as Anadarko still has more than 2,500 identified future drilling sites in that single play. Bottom line, Anadarko Petroleum will continue to fill Texas' coffers for years to come.