Energy Business

5 Top Independent Oil Producers in the Permian Basin

Concho Resources Inc. (NYSE: CXO) holds more than 92,000 net acres in three different areas of the Permian Basin. The company produced nearly 73,000 barrels of oil a day. The average realized price per barrel in the third quarter was $86.05, compared with a price of $102.10 in the year-ago period. Operating costs and expenses totaled $43.11 per barrel in the third quarter, up from $41.66 in the year ago quarter. DD&A accounts for more than half the expenses in both year.

Concho has already cut its 2015 capital spending plan twice. The most recent cut, on January 5, trimmed capex to $2 billion, of which $1.8 billion will go to drilling and completion. The company expects to cut its rig count from 36 to 30 in the first quarter and to 25 for the remainder of the year. Even with the lower drilling activity, Concho expects production to rise by 16% to 20% in 2015.

Pioneer Resources Inc. (NYSE: PXD) holds about 825,000 gross acres in the Spraberry field of the Permian Basin. The Spraberry has conventional vertical wells as well as horizontal wells in the portion of the field known as Wolfcamp. The company reported a third-quarter average realized price per barrel of oil of $90.82, down from $101.70 in the year-ago quarter. The total includes all the company’s production, not just that from the Permian Basin. Expenses on oil and gas properties, including DD&A, totaled $25.30 per barrel of oil equivalent.

Pioneer announced early in January that it had converted about 85% of its 2015 oil derivative contracts from three-way collars to fixed-price swaps. The fixed-price swaps cover 82,000 barrels of oil production per day at an average NYMEX price of $71.18 a barrel. The company maintained its three-way collar contracts for 2016 (a $96.46 per barrel call price, an $85.47 per barrel put price and $74.35 per barrel short put price). The fixed-price swaps should help the company’s cash flow this year, and Pioneer can hope that prices start rising again for 2016.

Devon Energy Corp. (NYSE: DVN) holds 1.3 million net acres in the Permian Basin and operates 21 rigs that drilled about 400 wells in 2014. The company reported production of 56,000 barrels per day from its Permian operations in the third quarter of 2014, up from 49,000 barrels a day in 2013. The company received $90.23 per barrel of oil in the quarter, down from $101.40 in the same period a year ago. Operating expenses, G&A and DD&A for the third quarter totaled $24.39 per boe, up from $20.03 per barrel a year ago. Cash margin before taxes totaled $44 per boe in the third quarter.

Devon has so far said nothing about its plans for 2015, but the company has touted its strong balance sheet as its main weapon against collapsing crude oil prices. The company’s Permian Basin operations are among its most profitable and should continue to prove that into next year.

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