Oil investors have been on the lookout for a new hotspot in production and though oilfield traffic has diminished in the US, it has quite the resource remaining in Texas.
The Permian Basin is the largest of the shale-oil regions that helped drive the American energy boom and it is still showing signs of constant production increases. It is an area the size of many Middle Eastern countries and heavyweights such as Exxon Mobil Corp. (NYSE:XOM) and Anadarko Petroleum (NYSE: APC)have staked their claim in the basin.
Known for its resemblance to tiramisu cake, it is a large sedimentary basin in the southwestern part of the United States that contains the Mid-Continent Oil Field province. This sedimentary basin is located in western Texas and southeastern New Mexico.
Even as other major basins in the US like the Bakken and Eagle Ford scale back due to declining oil prices, production appears to be on the rise in the Permian.
Royal Dutch Shell Plc (AMS: RDSA) energy analyst Laird Dyer, told a conference in Toronto that the Permian’s multiple layers of oil- and gas-soaked rocks, in some places stacked 5,000 feet thick, contain plenty of places to drill that will yield 30 percent to 40 percent rates of return with crude prices as low as $40 a barrel.
“A single layer in the Permian, the Spraberry, probably holds 75 billion barrels of recoverable oil.”
Those recovery levels would be enough to supply the world for two years.
The current rising production and acquisition activities in the region are just some of the major factors that help to buoy current US domestic production levels.
Some operators in the area with solid assets and track records include:
- EOG Resources, Inc. (NYSE: EOG) - One of the largest crude oil and natural gas exploration and production companies in the United States.
- ConocoPhillips (NYSE: COP) - The world’s largest independent E&P company based on production and proved reserves.
- Marathon Oil Corporation (NYSE: MRO) - Independent exploration and production company.
All three stocks are currently experiencing a downward dip in share price, which could be seen as a bargain time to to buy.