Houston’s ConocoPhillips is bucking the trend of churning as much oil out of the booming Permian Basin as possible, instead focusing on less crowded areas like South Texas’ Eagle Ford shale.
While ConocoPhillips has a major Permian presence, it’s taking it slow as the Permian rush is creating labor and pipeline constraints, causing ever-greater inflation on oil production costs.
With that in mind, ConocoPhillips Chief Executive Ryan Lance said he sees better a bang for the buck – at least for now – in the Eagle Ford and even in North Dakota’s Bakken shale. These are regions that were left for dead by many companies after oil prices crashed in late 2014.
“Now that people have left the Eagle Ford and gone to the Permian and other places around the U.S., we’re seeing the opportunity,” Lance said. “The cost structure is lower, and we’re not seeing the sort of rapid inflation you’re seeing in the Permian.”
In the first quarter of 2018, ConocoPhillips produced 163,000 barrels a day of oil equivalent from the Eagle Ford compared to 19,000 barrels daily from the Permian. That’s more than 8.5 times the volume in the Eagle Ford versus West Texas.
“You want to go slow and understand what you’re doing before getting into full manufacturing mode,” he said. “We’re not in a hurry to grow it fast against a system that’s completely constrained today.
“We’ll take our time, and we’ll do it right,” Lance added. “Our industry in general spends every bit of cash that we get and puts it back in the ground. We’re trying to be very different from that and very disciplined in how we approach it.”
ConocoPhillips also aims to grow more in South Texas and neighboring Louisiana because much of the Eagle Ford overlaps with the Austin Chalk shale play that extends in Louisiana. ConocoPhillips bought more acreage in Louisiana this year with the intent of taking its successes in South Texas and duplicating it there.
The Eagle Ford is the second-busiest basin in the nation, but a very distant second to the Permian. The Eagle Ford counts 78 active rigs compared to more than 460 in the Permian.
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