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



US onshore plays: Internal rates of return

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%.

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