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Insight 12 February 2013

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Report summary

Production from the Permian region grew by 12% to average 2.0 million boe/d in 2012. Spending on unconventionals across the region totalled US$11 billion, trailing only the Eagle Ford and Bakken. Operators ramped up development in the Bone Spring while further delineating the Wolfcamp Shale. M&A activity remained hot totalling US$12.3 billion in 2012 as key assets shifted hands in the region.

A year of growth
- Rig count rises
- Permian spending grows by 20%
  - We estimate Permian spending in 2012 was US$18 billion, 20% more than in 2011. Of this, US$11 billion was spent on unconventional plays, which trails only the US$18 billion spent in the Bakken and US$25 billion in the Eagle Ford. Occidental was the top spender in the region, spending over US$1.5 billion to develop its massive position throughout the region.
  - The Midland Basin dominated investment in 2012 due to the emergence of the Wolfberry Play. The Wolfberry commingles production from the conventional Spraberry field with the underlying Wolfcamp Shale. The Spraberry, Wolfcamp and Wolfberry all ranked in the top four regional plays in terms of spending.
- Emerging plays drive production growth
- Constraints in takeaway capacity depress prices
Mergers and Acquisitions
- What to watch for in 2013
  - Wolfcamp
  - Bone Spring
  - Cline