Can Exxon's Permian Reach 2.5 Million BOE/D?

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Welcome to the top of the Barrel podcast, the second episode to be clear. Today I have Mike Stinebaugh on with me. He is a corporate analyst on the Novi intelligence team. And if you missed the first episode, Mike was coincidentally also on that one. But we are essentially just aiming to bring some of the research, some of the data topics that we find interesting out of the paywall and onto the podcast, so you can get access to some stuff that maybe you wouldn’t normally have access to.

00:00:35:22 – 00:01:02:14

So, Mike, welcome to the podcast again. Thanks, Brandon Yeah, yeah. No worries. This is what happens when you keep writing bangers. You have to. You have to come on every week. So today we’re going to go through a piece that’s not actually out yet, but it’s coming out probably coincidentally with with the release of this podcast, which is going to be on the Exxon corporate coverage.

00:01:02:14 – 00:01:28:22

So for those of you who don’t know, we have a corporate research team we are bringing. We’re upwards, getting close to 20 names now under coverage, Exxon being the latest. And they are a unique operator. And we’ll get into why. So 30,000ft view. We’ve initiated coverage of Exxon they are the largest operator in the Permian right now, or at least in the Midland.

00:01:29:00 – 00:02:01:10

I think people would be surprised. And this is a good kickoff point to hear that the production is up 1,200% since 2015. So, you know, high level takeaways, lower 48 wide. We can zoom into the Permian after Mike. I’ll leave it to you to kick us off. Yeah. Thanks, Brandon. ExxonMobil really is lower 48 portfolio is undergone a massive transformation since the XTO acquisition, which was about over 15 years ago.

00:02:01:11 – 00:02:31:13

You know, that was a heavily gas weighted, you could say just checkerboard of assets all across the lower 48. Not really any or much at all concentration in the Permian. And then in about the last decade, Exxon is really focused on just developing its Permian assets. When you sift through Exxon company materials, they like to use the term advantage assets.

00:02:31:14 – 00:03:11:06

And within their upstream portfolio, they’ve really tagged the Guyana in Permian assets as advantaged asset. I’ll pause you there to you, Mike, for a second. When they say advantaged, I guess, what are you perceiving that to be? Is that low carbon, geographic, economic, everything, thoughts? It sees the highest deployment of CapEx dollars in their portfolio, meaning that of all their upstream assets available, where they can deploy capital, the highest returns are going to be on those two assets.

00:03:11:08 – 00:03:46:18

So diving into just a Permian asset alone in the past decade, as you cited, that massive, you know, percentage growth number, it’s gone from not even 200,000 boe a day to currently their Q1 2026 production was about 1.7 million boe a day. Yep. And really, just in the last couple of years, that’s stepped up quite a bit because prior to the Pioneer acquisition there maybe in the ballpark of 700,000 boe a day.

00:03:46:19 – 00:04:16:05

They realized 2024 production of 1.2 million boe a day. And then they jumped up in 2025 to posting pretty large growth at 1.6 million boe a day. Now, getting there required them to step up activity quite a bit. And then now in Q1, they’ve they’ve reported 1.7 million boe a day. So they are the growth trajectory is is off and running.

00:04:16:07 – 00:04:57:17

Now what’s interesting is they had a 2.3 million boe a day target at the end of 2025 that they said by the year 2030, we are going to be producing 2.3 million boe a day from our Permian asset. Then they upped that number to 2.5 million boe a day. So now as we’re looking ahead, Exxon thinks that it can grow production from 1.7 million boe a day from Q1 to 2026 to 2.5 million boe a day by 2030.

00:04:57:18 – 00:05:32:12

That is just a massive, ambitious target to go for. So to zoom out here, we get into this post Covid era. They Pioneer, they’re sitting at 1.2 – 1.3. And I’m giving us the 30,000 foot view here. They grow in organically to 1.7, which in itself is pretty staggering growth, with a target of 2.3 million boe per day by 2030, which they then revise up again to 2.5 million boe per day.

00:05:32:15 – 00:06:04:12

I believe that just happened recently. So just keeping that, I guess goal or their target in mind. There was a quote that I really liked from the report that you wrote, which, you know, paraphrasing here, but hitting that growth target is more a function of operational excellence and execution versus geology. Like they have the rock. It’s just a staggering amount of lateral feet that need to be drilled, and they need to be drilled well in a row.

00:06:04:13 – 00:06:25:14

And maybe, you know, I don’t want to put words in your mouth. You wrote the report, but my need to response is just given how I guess, given the reputation of Exxon for having, you know, running a tight ship and being, you know, very rules based, and they do have good operational excellence, maybe they’re the right operator to do it.

00:06:25:14 – 00:06:53:09

So I’ll pass it back to you with that. Thoughts? Yeah, a lot to unpack there. When you just start to look at the number of wells per year that will be required to hit that 2.5 million number, I mean, it’s staggering in this prior year in 2025, which we use as a baseline for really determining what is the run rate going forward for Exxon to hit this, hit this target. In 2025,

00:06:53:10 – 00:07:26:23

I mean, they were in the Midland Basin alone there, turned in line about 660 wells. And then in the Delaware Basin, it was 285. So, you know, wells is one thing, but looking at lateral like cumulative word, I mean turning in line 12 to 13 million lateral, you know, cumulative lateral feet a year to hit this target. That’s going to be over a thousand wells a year going forward.

00:07:26:23 – 00:07:54:13

And that carries massive execution risk. So many will look at this 2.5 million boe a day number and say that is a pie in the sky. You can’t hit it. It’s great to have ambitious goals, but if you fall just short of those ambitious goals, then you’re probably still looking pretty good. Yeah, I personally don’t see this as a pie in the sky number.

00:07:54:14 – 00:08:37:01

I see it as attainable, but it will be challenging to get there. Exxon does have the inventory. It has high rock quality and has lengthy runway of high quality that could get it there. It is going to come down to execution and finding the supporting infrastructure to get there. Yep, yep. No doubt. So I think the report notes that the median NPV 25 breakeven is in the low 50s across all of the remaining.

00:08:37:02 – 00:09:07:20

I believe that’s their Midland plus their Delaware acreage. Correct. Now that does assume that through a combination of in-basin sales and firm contracted gas transport, that they can actually get to the Gulf Coast, etc., they’re getting about 250 realized on the gas side, right? So there’s a bit of a caveat to that breakeven number. And I think to your point, executing on getting all that gas out is, is is kind of the key here, right.

00:09:07:21 – 00:09:34:20

That changes the breakeven a lot if you start paying people to take your gas. So, they’ve got the rock, they’ve got the breakevens for it. They’ve got the runway for it. And it sounds like this point. Yeah, it’s a combination of executing on a pretty grandiose large plan, coupled with also working with midstreamers to make sure that that products actually get out of the basin on time over the next five years.

00:09:34:22 – 00:10:12:14

Right. So, you know, moving on to one of the next questions I had here, which is and we’re starting to zoom out a little bit, but Exxon is maybe not unique, but in a unique group of operators, some subset of operators in the Permian that are choosing to still grow, right. So when I look broader Permian macro right now, you know, equivalently large operators Conoco, Diamondback, Chevron, EOG largely seeing flat, right, flat production profiles.

00:10:12:15 – 00:10:43:03

Obviously there’s there’s the jaggedness of, you know, the development profiles. But but generally speaking they look flat. There’s some mid-sized operators I think Crescent which obviously, acquired Vital. They had some I’d say, call it probably mild production declines. And then you get into this other cohort which is Exxon, Permian Resources, Devon, maybe to a lesser extent Apache who are growing right.

00:10:43:03 – 00:11:11:09

And in in aggregate, and maybe you’d be surprised to hear this number, but in aggregate, those four operators that are growing, we’ve seen something just shy of 20% growth versus kind of year end exit 2024. So I’ll leave that, you know, I’ll pass that back to you there. But obviously they stand out on that front. Yeah. I think you almost have to examine this on a operator by operator basis.

00:11:11:09 – 00:11:46:00

And then also, like you said, almost a peer group as the investing community tends to hold the E&P pure plays to a different standard than the majors as someone like Exxon, with them having the luxury of being vertically integrated, embedded in other energy value chains. They have the insulation or a bit protected from the standard investment metrics that govern the upstream industry of, such as reinvestment rate.

00:11:46:03 – 00:12:17:04

So if if a I’ll say, you know, pure play E&P announced this massive plan to grow at all costs to 2030 would likely get hammered by the community. But when Exxon lays it out, it’s a completely different story because they have the balance sheet to capitalize this long term growth. And as a company, they just don’t view things in a shorter return horizon.

00:12:17:06 – 00:13:05:13

So like you said, on the growth that’s hitting, you know, some of these Permian peers, where it gets interesting is if you look at their total production base on a boe equivalent or on a on just a boe per day number, you do see some production growth. However, when you look at just oil production only, that growth isn’t as pronounced, meaning some of these names are starting to get just a bit gassier overall, and in the production isn’t showing up as much on their oil on their oil base where, you know, Exxon’s unveiled this massive target and they’re actually going to be growing their oil production as well, which is extremely difficult.

00:13:05:15 – 00:13:28:07

Yeah, that makes sense. I guess just getting into the back end of my questions here, maybe a little bit open ended towards you, but you took a look at more than just the Permian, right? Exxon obviously there’s a ton of assets. Eagle Ford on the market. Right. Anything else that jumped out at you as you’re going through the lower 48?

00:13:28:09 – 00:13:56:18

Yeah, I mean, they have assets everywhere, I should say, as you were going through the globe, you know, I’ve got assets everywhere. So yeah, within the lower 48, I mean really, really all the non Permian assets have just not seen much CapEx activity as far as rigs or frack crews and would consider really any non Permian Exxon lower 48 asset.

00:13:56:19 – 00:14:35:10

Could be safe to say it’s on the table as a divestment option. The one asset that you know Exxon does not label as advantaged, however that could change in the future, is it’s Haynesville asset. They have a decent amount of inventory or runway on that asset that they’ve just chosen not to develop. And this is also kind of, it has an interesting place in the future macro as Exxon just put that Golden pass LNG export asset online and in service.

00:14:35:10 – 00:14:46:17

So that is up and running that could you know, complement that asset, and you know Exxon looks at this from a

00:14:46:19 – 00:15:11:18

very long term horizon, kind of different than other. Playing this game on the century scale right. Yeah. So they that asset kind of stood out in general as it has a lot of runway and they’ve just chosen not to develop it. So absolutely forward to to wait out, you know gas route for a better environment. And we’re obviously heading into that.

00:15:11:18 – 00:15:31:22

I think it’s fair to say at this point. I guess, would you agree, given anyone’s unaware, you missed the first podcast, Mike has a background both in Tellurian and some mineral shops after that. So he’s pretty tuned into the the LNG space. But,

00:15:32:00 – 00:15:58:13

you know, either flip or grow. My initial response is that, yeah, the Haynesville is about to head into a pretty rosy period of time here. Would you agree with that? Yeah, I would agree. I think, you know, the forward macro is definitely going to see a price spike at some point. Just how long it persists is a big question.

00:15:58:15 – 00:16:30:05

You know, you could have a cold winter or really hot summer combined with the growth in pipeline exports to Mexico, combined with the growth in LNG exports, you’ll see a price spike. However, does that get drilled right back down, or does that heightened price forward curve actually prolonged, which would see operators, gas weighted operators actually start to grow on more of a longer term basis.

00:16:30:07 – 00:16:57:07

Right. So typical story for gas now with a little bit of macro tail you know some macro tailwinds helping out. But generally speaking you know the good times might be slightly better, but the volatility is is definitely not gone. Yeah absolutely. Yeah I think that’s fair. Awesome. That’s the end of my questions here Mike. So with that I will sign it off.

00:16:57:07 – 00:17:00:08

But yeah appreciate you coming on. Thanks. All right. Thank you.