Why oil companies are switching their production to the Permian Basin

Fuel Fix:
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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.
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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.

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