Exxon, Chevron to grow Permian basin production by over 2x rate of rivals

(Bloomberg) – ExxonMobil Corp. and Chevron Corp. are both on course to grow production from the Permian basin by 10% this year, more than double the rate of their smaller rivals.

Exxon produced about 620,000 bpd in the second quarter from the world’s largest shale basin, which straddles Texas and New Mexico, while Chevron’s output increased to 772,000 bbl, the companies said Friday. Together, the companies’ Permian production now makes up nearly a quarter of the basin’s total.

Both aim to accelerate production to more than 1 MMbpd before 2030 before holding flat for the next decade.

The U.S. supermajors’ production stands in marked contrast their publicly traded independent rivals, who have mostly capped growth rates at 5% a year. Rather than investing all their cash in new wells, they’re now focusing on returning cash to shareholders through dividends and buybacks.

Exxon and Chevron are making enough cash elsewhere in their global portfolios that they can afford to spend on growing shale, which was of little interest to them until about 10 years ago. Chevron sees 30% returns on capital employed in the Permian, more than double the company’s global level currently.

Exxon and Chevron’s production plans are based on their current acreage, but could be increased further if they were to make acquisitions.