Exxon Plots Path to Lofty Permian Production Target

Exxon Mobil is reviving its plans to reach production goal of 1 million barrels of oil equivalent per day in the Permian Basin by 2027, although the path forward is expected to include some peaks and valleys.

“If you think about ultimately getting to 1 million [boe/d] by 2027, that's roughly a 13% compounded annual growth rate,” CEO Darren Woods said during the company’s fourth-quarter earnings call on Tuesday. “That's not going to be steady every year. That will kind of fluctuate, call it plus or minus 5%. But that's kind of, order of magnitude, how we'll see that playing out.”

The US supermajor reported output of more than 560,000 boe/d in the Permian in the fourth quarter and plans to reach 600,000 boe/d this year.

Last year both Exxon and rival Chevron lowered their short-term production outlooks for the Permian. Exxon had originally aimed to hit 1 million boe/d in the play by 2025, but an unprecedented dip in demand and prices due to the Covid-19 pandemic forced the company to rethink those plans. Last year it was on track to hit 800,000 boe/d in 2027 and expected to plateau some time later at around 1 million boe/d.

Exxon said it plans to build up its inventory of drilled-but-uncompleted wells in the Permian to an "optimum level" after drawing it down during the pandemic.

“I'm hopeful that as we continue to focus on technology developments and continuing to improve efficiency, we'll see either that production brought on line effectively at lower cost or, in fact, more productivity and higher production,” Woods said. “But that's a function of the ongoing work we've got to bring our technology and operational capabilities to bear in the Permian, continue to improve what we're doing there.”

Bargain Hunting

Exxon has hinted in recent months that it could grow through acquisitions as well as the drillbit. Upstream President Liam Mallon said at the EI Forum in London in October that the company was “focused” on deals with a cost of supply within a $15-$35 per barrel range.

While Mallon pointed to unconventional, LNG and deepwater as potential high-value investments, Woods on Tuesday said he saw opportunities for undeveloped Permian assets.

“The work we've been doing in the Permian will provide a value opportunity that we can leverage when the market is right,” Woods said. “And I think expectations start to align around values from a buyer standpoint as well as a seller standpoint. And so there's an element of that where it's difficult to go in and buy at the top of a commodity cycle. You tend to want to — at least I want to focus in on where you see more, I'd say, longer-term price cycles being priced into assets."

Woods added that Exxon continues to look at potential deals in the chemical sector, and that he also sees a market for low-carbon solutions assets developing over time.