Oil giant Chevron Corp. is focusing on joint ventures and drilling alliances to win the race to be the first company to produce 1 million bpd in the field after abandoning a bid to acquire Anadarko. Chevron’s strategy now relies on sharing expertise and output with its partners.
Despite having fewer drillers than ExxonMobil, Chevron’s Q2 oil and gas production in the Permian Basin was 421,000 bpd, second only to Occidental 533,000 bpd, but with faster production growth. This compares to Exxon’s 274,000 bpd. Chevron also has its own mineral rights on much of the area meaning it does not need to pay 20%-25% production royalties most rivals do.
Besides, Chevron’s wells are deeper on average, at nearly 9,000 feet and are on course to reach 10,000 feet next year, compared to the industry standard of 8,500 feet. Deeper wells allow Chevron to pump more oil. Chevron’s peak production averages 760 bpd per well, compared to rivals’ 705 bpd.
Shale wells deplete quicker than conventional wells. They become most productive in their first few years. Output in Chevron’s wells declined by 52% after the first year, compared to rivals’ 70% lost. Chevron also manages to keep its average well productivity 40% higher than competitors.
