Amoco and Shell Form Limited Partnership in Permian Basin Area

Strategic Insights -

Amoco Corporation and Shell Oil Company are planning to form a limited partnership to combine their exploration and production assets in the greater Permian Basin area of West Texas and Southeast New Mexico. The partnership, which will be owned 65% by Amoco and 35% by Shell, aims to increase profits and ultimate recovery by allowing the companies to find and produce more oil and gas at lower cost.

Key Takeaways:

  • The partnership will combine exploration and production assets covering an entire U.S. geologic basin, marking the first time two major oil companies have attempted this approach.
  • The partnership is expected to generate several hundred million dollars in additional cash flow over the life of the assets by maximizing equipment utilization and the application of best practices.
  • The new company will employ about 1,300 people and operate approximately 12,000 wells, producing around 210,000 gross barrels of crude oil and 250 million gross cubic feet per day (mmcfd) of natural gas per day.
  • The partnership will also process more than 400 mmcfd of natural gas and yield about 33,000 barrels per day of natural gas liquids.
  • Amoco's Permian Basin operations are part of the exploration and production sector of Amoco Corporation, a worldwide energy and chemical company.
  • Shell's West Texas and New Mexico oil and gas fields are owned and operated by subsidiaries of Shell Exploration and Production Company, a subsidiary of Shell Oil Company.

Statistics:

  • The partnership will be owned 65% by Amoco and 35% by Shell.
  • The new company will employ about 1,300 people.
  • The operations will involve approximately 12,000 wells.
  • The production will be around 210,000 gross barrels of crude oil and 250 million gross cubic feet per day (mmcfd) of natural gas per day.
  • The processing capacity is more than 400 mmcfd of natural gas, yielding about 33,000 barrels per day of natural gas liquids.

Sources:

  • Amoco Corporation
  • Shell Oil Company
  • PRNewswire (Oct. 10, 1995)