In another sign of the growing importance of the West Texas oil fields to Chevron U.S.A., the company announced this week it has a joint development agreement with Cimarex Energy Co. for Delaware Basin acreage in Culberson County.
The midstream development agreement in sparsely populated Culberson County, due east of El Paso and home to most of Guadalupe Mountains National Park, will also provide Chevron access to infrastructure including a gathering system, roads and utilities.
The eight-year agreement covers 104,000 acres and will be operated by Cimarex, a Denver-based independent oil and gas exploration company.
In addition to the acreage it contributes to the development area, Chevron will receive a 50-percent interest in Cimarex’s Triple Crown gathering system and a 50-percent interest in wells drilled during 2013, according to the announcement.
“This transaction builds on Chevron’s premier position in the Delaware Basin and is another step in the execution of our Permian growth strategy,” Alan Kleier, vice president of Chevron’s Mid-Continent business unit, said in a news release announcing the deal.
“Our complementary acreage positions in West Texas and New Mexico, along with our common development outlook, make Chevron and Cimarex natural partners.”
Chevron has been among the vanguard of major oil companies beefing up their presence in West Texas as oil prices have risen and new technologies make the fields there worth drilling.
While many companies pulled out after the bust of the 1980s, Chevron has been in the Permian Basin since 1925. Last year, its oil equivalent production in the Permian was 119,000 barrels per day.
Chevron, which is based in Santa Ramon, Calif., but has a large presence in Houston, is building a $100 million office campus in Midland and currently has about 550 employees there. Spokesman Russell Johnson said the company plans to increase that to about 800 employees over the next few years.
Chevron is one of the largest leaseholders in the Permian, with more than 2.7 million gross acres.