Spraberry/Wolfcamp Oil Field Produces Heavy Returns for Companies Investing in the Permian Basin
A new and improved oil and gas boom has developed in several key areas in the Lower 48 states of the U.S. These areas are primarily shale plays, and the development of hydraulic fracturing (fracking) and horizontal drilling technologies has made these areas not only viable options, but some of the best areas of production.
Within the Permian Basin, the Spraberry/Wolfcamp field has become one of the most important for exploration and production companies. The three top companies in average daily production in the Spraberry/Wolfcamp are Pioneer Natural Resources, Apache Corp., and Concho Resources. These three hold major land resources in this area and have planned to devote even more of their investing capital into the Spraberry/Wolfcamp oil field over the next few years, including additional investments in the remainder of this year.
Pioneer Natural Resources
Pioneer Natural Resources, the top producer in the region, currently produces oil equivalents at an average of 93,000 barrels per day. Already, their production in the Spraberry/Wolfcamp field is at 58 percent of their total production in 2013.
Pioneer has allocated 76 percent of their planned $3 billion of drilling capital for the year at this field. Twenty-four of the company’s 35 rigs in this area are horizontal, and the remaining 11 are vertical. The company has said that it plans to phase out vertical drilling completely in the next three to five years.
The second major producer in the Spraberry/Wolfcamp field, Apache Corp., has an average daily output of 51,000 barrels of oil equivalents. This represents about 10 percent of the company’s total production, and it expects at least a 15 percent growth rate in oil production by the end of the year.
Apache plans to spend 30 percent of its $8.5 billion in exploration and production capital for the year in the Permian Basin. The company has already increased the numbers of horizontal rigs beyond their number of vertical rigs, favoring that method of extraction.
Concho Resources is the third largest player in the Spraberry/Wolfcamp field, with an average of 37,000 barrels per day. The company focuses almost all of its resources in the Permian Basin, with some success in the Delaware Basin as well.
The company’s success has already brought a 20 percent increase in production from operations in 2013. Only 44 percent of the wells drilled last year were horizontal, but the company plans to increase that number and use horizontal rigs almost exclusively to double their production by the end of 2016.
These three companies are not the only ones staking claims in the Permian Basin. In fact, the Permian shale play is currently the largest onshore play in the U.S. In May of this year, there were 1,528 oil rigs in the U.S., and more than one third of that number was made up of crude oil rigs in the Permian Basin.
Experts are predicting that production in this region should continue to rise for the next few years, at least, due to its excessive amounts of oil. As long as the US oil prices stay around $100 per barrel, everyone who invests in the Permian Basin should expect a huge payoff.