Photo credit: Devon Energy Corp (NYSE:DVN)
The Permian Basin is one of America’s most prolific oil basins. It has produced more than 29 billion barrels of oil since 1921. For perspective, that equates to the entire current proved oil reserves of the United States.
Last year, the Permian produced about 312 million barrels of oil, or about 14% of U.S. oil production. However, its best days might be ahead of it. Thanks to new drilling techniques, the oil industry is unlocking more oil all the time. In fact, oil production growth is expected to accelerate from a 7% annual rate over the passt five years to a 12% annual rate over the next five. That’s driving tremendous production growth at the following five companies.
Concho Resources Inc. (NYSE:CXO)
Over the past year Concho Resources Inc. (NYSE:CXO) has grown its daily oil production by 22% thanks to its pure-play position in the Permian. The company is still trying to determine exactly how much growth lies ahead as it transitions to drilling horizontally in emerging areas like the Avalon, Bone Spring, Wolfcamp and Wolfberry. However, given its 630,000 net acres in the play, it should easily be able to continue delivering double digit production growth for a long time.
ConocoPhillips (NYSE:COP)
While its growth in the play isn’t at as high a rate, ConocoPhillips (NYSE:COP) still expects to grow its production in the Permian by 7% annually through 2017. However, that’s just taking into account the company’s conventional production from its legacy assets. Looking ahead, the company has over a million net acres in the region and at least 200,000 of those net acres are prospective for emerging unconventional areas like the Wolfcamp, Avalon and Bone Spring. As these plays are de-risked, it could enable Conoco to grow its production by an even greater future rate.
Devon Energy Corp (NYSE:DVN)
One company really thriving in the Permian is Devon Energy Corp (NYSE:DVN). The company is expected to grow its oil production in the Basin by 40% this year, which is really fueling its push into becoming an oilier company. It has 1.3 million net acres in the basin, giving it several target areas to continue to drive oil production growth. With 1,500 new drilling locations identified in the last year alone, Devon has plenty of drilling inventory to keep its oil production growing.
Occidental Petroleum Corporation (NYSE:OXY)
Of the 1,500 operators in the Permian, Occidental Petroleum Corporation (NYSE:OXY) is the largest producer at about 16% of the basin’s total. More than half of its production is from enhanced oil recovery projects, which are designed to breathe new life into legacy oil wells. However, the company does have ample opportunity to tap the emerging areas of the play thanks to its 1.7 million net acres. Overall, the company believes it has another 2.5 billion barrels of recoverable oil equivalents in this legacy basin.
