Energy companies find at least 1 benefit of downturn

Oil companies, bludgeoned by the drop in oil prices, have been working feverishly to cut the cost of pulling a barrel of oil out of the ground.

On Friday, Exxon Mobil and Chevron both revealed how far they’ve been able to reduce drilling costs — and in the nick of time.

RELATED: Exxon profits plunge nearly 60 percent; lowest since 1999

Exxon, whose profits fell to $1.7 billion in the second quarter — the lowest in more than a decade — said its development cost in West Texas’ Permian basin has plummeted from $25 a barrel two years ago to $8 a barrel last quarter. Jeff Woodbury, Exxon’s vice president of investor relations, noted that production in the Permian is growing swiftly.

Chevron posted a second-quarter loss of $1.5 billion on Friday, compared with profit of $571 million a year earlier.

RELATED: Chevron posts $1.5 billion loss in second quarter

But the company said it, too, has been able to cut development costs in the Permian from almost $20 a barrel last year to about $10 in the second quarter of 2016. Well development includes drilling, completion, facilities and administration costs, Chevron said.

Jay Johnson, Chevron’s executive vice president of upstream business, said production in the region has grown faster than expected. In fact, he said, the company is adding another rig next month, bringing its total to 10 in the Permian.

“I think we’re now fully competitive with these other players,” Johnson said during Friday’s earnings call. “We may not be flashy, but we’re steady. We’re ramping up the number of company operated rigs.”

Much of any extra cash, however, will go toward restoring the company’s balance sheet, executives said.

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