To acquire operating equity in 34,000 gross acres within the Wolfcamp formation of Midland and Upton counties in the Permian Basin.
Exxon Mobil Corp. (NYSE: XOM) entered an agreement with Endeavor Energy Resources LP to fund development in the Permian Basin of Texas.
Exxon Mobil will gain substantial operating equity in 34,000 gross acres in the prolific liquids-rich Wolfcamp formation in Midland and Upton counties. Endeavor will continue to operate shallow production while Exxon Mobil will drill and operate horizontal wells in the deeper intervals.
The agreement increases the company's holdings in the Permian Basin to just over 1.5 million net acres, enhancing the its significant presence in one of the major U.S. growth areas for onshore oil production.
“The Wolfcamp shale is a vast, tight oil resource with tremendous potential,” said Cleveland. “The presence of multiple, stacked pay zones creates the potential for capital-efficient horizontal development, and the proximity to XTO’s ongoing Wolfcamp operations will offer operating cost efficiencies.”
In a separate transaction involving its holdings in the Utica shale of Ohio, Exxon Mobil signed an agreement with American Energy – Utica LLC (AEU), an affiliate of Aubrey McClendon's American Energy Partners LP, following a competitive bid process.
The agreement will enable AEU to earn 30,000 net acres of Exxon Mobil’s Ohio leasehold in Harrison, Jefferson and Belmont counties. Exxon Mobil will continue to operate in a core area of 55,000 net acres, optimizing development by using proceeds from the transaction to fund 100% of near-term development costs.
Exxon Mobil recently initiated development in the Utica. Its initial well had producing at a peak 30-day rate of about 15 million cubic feet per day (MMcf/d) of dry gas. The agreement funds near-term development of a substantial operating position in this emerging play, said Randy Cleveland, president of XTO Energy Inc., a subsidiary that manages the company's U.S. oil and natural gas portfolio.
“These transactions underscore our commitment to developing high-margin liquids growth in areas such as the Permian, while also efficiently funding development of our extensive domestic natural gas resource in emerging plays such as the Utica,” Cleveland said.
Exxon Mobil grew its production in the Appalachia region by almost 30% in 2013, and maintains a strong presence with about 645,000 acres in the Marcellus and Utica shale plays. The company manages a portfolio that has tripled in size since 2009 when the merger with Exxon Mobil was announced.