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BHP Billiton Ltd. may soon sell its assets in the Permian Basin to Shell, a company trying to boost its production activities in the Permian Basin, according to a new report by Bloomberg.
Shell began drilling in the Permian in 2012, just a couple years before the market crash that continues to keep crude barrel prices low. In order to bring cash flow to positive levels in 2019, the Anglo-Dutch company plans to increase drilling in the Permian, where production is relatively cheap and profitable in bearish markets. Per barrel costs can be as low as $15 in the Texas formation.
Shell “will look at opportunities to bulk up our shale position,” the company’s Upstream Director Andy Brown said at the International Petroleum Week conference in London. BHP has good assets that “overlap our own acreage in the Permian,” and “may be interesting for us.” No news on whether or not the megafirms are in talks for an asset swap or buyout.
BHP has been planning to unload $10 billion in U.S. shale assets before the end of the year. The latest reports say the company has accelerated its timeline for making the deals final. Three of the seven asset packages include lands in the Permian. Bids should start coming in during the month of June.
Related: U.S. Plans Largest Ever Oil & Gas Lease Sale In Gulf Of Mexico
“We do see the potential there, we do see us performing very well there,” Brown said regarding Permian prospects. Shell has focused on deep water projects in recent years, but the company will look “over time to push a bit harder on that shale business.”
The Permian has been pumping oil since the 1920s. Conventional oil production started to decline in the late 1970s, but the fracking boom revitalized the oil-producing region in the early 2010s, and as oil prices rose last year, the Permian beat its previous record for annual oil production dating back to 1973.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…
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