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Exxon Looking to Expand Operations in West Texas

October 13, 2015

Multiple sources are reporting that Exxon’s shale drilling unit, XTO Energy, is working to acquire smaller oil producers in West Texas. The ultimate goal, according to the company’s CEO, is for Exxon to be able to double its production in the Permian Basin over the next three years. This, coupled with acquisitions in other parts of the country, is expected to continue Exxon’s trend of increasing its reliance on domestic oil.

Amid Budget Cuts, Exxon Seeks to Expand

By making these acquisitions now, Exxon is seeking to take advantage the drop in oil prices. While oil and offshore drilling companies – including Exxon – are laying off workers and making other budget cuts, the oil giant hopes that it can seize on the opportunity to structure low-cost deals with these smaller struggling companies.

Exxon actually began executing its strategy last year, and in August of 2015, it signed agreements to drill on 48,000 acres in West Texas. However, September news reports indicate that the company’s current expansion efforts are far from over.

In its past expansion efforts – including its $35 billion acquisition of XTO Energy – Exxon used upfront cash layouts to fund its acquisitions. Now, however, with smaller companies in the Permian Basin floundering, Exxon is taking a different approach.

Rather than offering big purchase prices, Exxon is offering a share of future profits from its acquired assets. With this share being as much as one-third of the company’s revenue from new discoveries, companies whose only other option is to start shutting down rigs may view this form of speculation as their best option.

Oil Drilling in West Texas

The Permian Basin is part of the West Texas shale region. Consisting of underground oil fields, the Permian Basin alone produces more oil than half of the OPEC nations. It has seen a 60 percent increase in production since 2007, and is now the largest oil producing region in the United States. According to the U.S. Energy Information Administration, as of May 2014, the six highest-producing formations in the Permian Basin alone were producing nearly a million barrels of crude per day. So, it is easy to see why Exxon is targeting the region for expansion.

Risks for West Texas Oil and Gas Workers

Like their offshore counterparts, oil and gas workers in the Permian Basin and other West Texas oilfields face many risks on a day-to-day basis. With the oil companies’ financial struggles, many of these risks have gotten worse. With their employers making budget cuts, West Texas oilfield workers may be more likely to suffer injuries in accidents due to:

  • Being forced to work longer hours
  • Inadequate training on safety procedures and industry regulations
  • Lack of supervision
  • Malfunctions in outdated and unmaintained equipment

Unfortunately, based on the economic outlook, these risks may continue to worsen before they improve.

Contact an Oilfield Accident Lawyer at Morrow & Sheppard LLP

Morrow & Sheppard LLP’s Houston work accident lawyers represent clients who have suffered injuries in work accidents in the Permian Basin. If you have been injured on the job, we can help you fight for maximum compensation for your medical bills, lost wages, and other damages. To speak with one of our attorneys for free, contact us online or call (800) 489-2216 today.

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