Permian Basin: Is It a Sweet Spot for Apache and US Producers?

Analysts at Raymond James recently surveyed internal rates of return (or IRRs) across major North American plays.

The Midland and Delaware basins, which are sub-basins of the Permian, had IRRs of 15%, even at sub-$40 oil prices. Apache (APA) has significant operations in both of these basins. Concho Resources (CXO) also has operations in the Permian Basin. APA and CXO make up ~3% of the Energy Select Sector SPDR ETF (XLE).

In comparison, the Bakken non-core and the Mississippi Lime need oil prices to be at least $50–$60 per barrel in order to achieve IRR of at least 10%.