E Hartstreet Oil: Occidental Uses Less Expensive Well Design, But Current Results Are Much Better

Occidental (OXY) has 2.5MM net acres in the Permian. 1.4MM net acres are an unconventional resource with the rest being EOR.  150,000 net acres are in the Texas Delaware Basin. It continues to improve well design, with the most recent wells being over 7,000 feet, compared to last year's 5,950 feet. Costs have decreased by 30% to a little over $1 million per 1,000 lateral feet. Current designs use 1,700 lbs of sand per foot. This is an increase of 600 lbs. Its 19 stage frac' uses 3 more than 1Q15, and is a slickwater.  In 2015, it still used a hybrid design. The new design has improved production over 180 days from 120 MBoe in 2014 to 300 MBoe in 3Q16. The newer results are impressive in 2nd Bone Spring of New Mexico. Some of these changes should provide an improvement in the southern Delaware Wolfcamp. The improvements in breakeven prices for Permian players have increased production from west Texas. This adds to the current crude glut and increases the amount of time needed to bring world inventories down. This could keep oil prices and the US Oil ETF (USO) lower than analysts expect.  

There are a large number of operators in southern Reeves. The well performance is much different from one design to the next. The production results are listed below for the area by operator:

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Disclosure: Data for the above article is provided by welldatabase.com. This article is limited to the dissemination of general information pertaining to its advisory services, together with access ...

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