Exxon Mobil Corp.’s oil wells in part of a marquee U.S. shale field generated fewer barrels per well as it ramped up overall spending and production, according to a new report that looks at data from 2018-19.
A $6.6 billion acquisition in 2017 of New Mexico acres doubled Exxon Mobil holdings in the Permian Basin that spans west Texas and New Mexico. The Permian’s New Mexico portion is among Exxon Mobil’s priorities with a goal to boost shale output to 700,000 bbl/d by 2025.
Exxon’s average liquids output over a well's first 12 months fell to 521 bbl/d in 2019 in its Delaware Basin holdings in New Mexico, down from an average of 635 bbl/d in 2018, according to IHS Markit data compiled by the Institute for Energy Economics and Financial Analysis (IEEFA).
It dropped to 6th from first on a per-well production basis among a group of large, publicly-traded producers, the data showed, behind Occidental Petroleum Corp., EOG Resources Inc. and others.
Full data for 2020 is not yet available and many wells across the basin were shut-in due to the pandemic, but initial findings of data that looks at the peak month of a well’s production “suggest that the company’s Delaware wells have continued to fall behind,” said Clark Williams-Derry, an IEEFA analyst.
Drilling More Layers
“We continue to execute on our strategy to maximize production in the Permian, which includes our New Mexico operations,” said Exxon Mobil spokesperson Julie King.
In a March presentation to investors, Exxon Mobil reported steady per-well gains between 2018 and 2020, citing its “core New Mexico development.”
The company’s Permian Basin holdings have “met or exceeded our volumes projections each year” for six years, Senior Vice President Neil Chapman told investors.
Producers commonly drill their greatest prospects first.
In 2018, Exxon Mobil was focused on the best slice in the Delaware Basin, which has a layer cake of oil-producing zones, said Raoul LeBlanc, analyst with consultants IHS Markit. It since has started to produce from other layers as well.
Exxon Mobil’s declining output per well came as the basin’s average improved about 5%, according to data released on Wednesday by IEEFA. U.S. shale production in the Permian rose sharply last decade but has slowed as oil companies focus on profit over output.
The Delaware Basin’s per well average overall rose to 478 bbl/d in 2019 from 454 bbl/d the year before. Initial results for 2020 show the average reaching 501 bbl/d, IEEFA said.
“They’re inviting investors to judge them on the production of their wells,” said IEEFA’s Williams-Derry. “But their actual production is not living up to what they seem to be claiming,” he said referring to the company’s investor presentation.
Exxon Mobil also is active in the Midland portion of the Permian where it ranked 12th out of top 20 in 2019 on an output measure that normalizes for well length. Its average production for the first 12 months of a well improved between 2018 and 2019, though.
Recommended Reading
Defeating the ‘Four Horsemen’ of Flow Assurance
2024-04-18 - Service companies combine processes and techniques to mitigate the impact of paraffin, asphaltenes, hydrates and scale on production—and keep the cash flowing.
Tech Trends: AI Increasing Data Center Demand for Energy
2024-04-16 - In this month’s Tech Trends, new technologies equipped with artificial intelligence take the forefront, as they assist with safety and seismic fault detection. Also, independent contractor Stena Drilling begins upgrades for their Evolution drillship.
AVEVA: Immersive Tech, Augmented Reality and What’s New in the Cloud
2024-04-15 - Rob McGreevy, AVEVA’s chief product officer, talks about technology advancements that give employees on the job training without any of the risks.
Lift-off: How AI is Boosting Field and Employee Productivity
2024-04-12 - From data extraction to well optimization, the oil and gas industry embraces AI.
AI Poised to Break Out of its Oilfield Niche
2024-04-11 - At the AI in Oil & Gas Conference in Houston, experts talked up the benefits artificial intelligence can provide to the downstream, midstream and upstream sectors, while assuring the audience humans will still run the show.