Why oil companies are switching their production to the Permian Basin
...This is another reason why the OPEC market share strategy has failed them. It also explains why producers are more focused on inland plays than offshore production.
Exxon, whose profits fell to $1.7 billion in the second quarter — the lowest in more than a decade — said its development cost in West Texas’ Permian basin has plummeted from $25 a barrel two years ago to $8 a barrel last quarter. Jeff Woodbury, Exxon’s vice president of investor relations, noted that production in the Permian is growing swiftly.
Chevron posted a second-quarter loss of $1.5 billion on Friday, compared with profit of $571 million a year earlier.
But the company said it, too, has been able to cut development costs in the Permian from almost $20 a barrel last year to about $10 in the second quarter of 2016. Well development includes drilling, completion, facilities and administration costs, Chevron said.