Devon Energy (NYSE:DVN) has one of the largest positions in the Permian Basin and plans to rapidly develop this acreage over the next five years as the company moves to meet its long-term goal of increasing crude oil and liquids production.

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Permian Basin Summary
Devon has 1.5 million acres under lease in the Permian Basin, with the acreage located in both Texas and New Mexico. The only independent exploration and production company with a larger position is Occidental Petroleum (NYSE:OXY), which has 2.4 million acres under lease.

Devon estimates that it has net risked resources of 2.8 billion barrels of oil equivalent (BOE) in the Permian Basin and more than 8,000 drilling locations on its acreage. The properties produce a mix of different hydrocarbons, and the company reports that approximately 75% of these resources are crude oil and natural gas liquids.

It reported average net production of 53,000 BOE per day from its Permian Basin properties in the fourth quarter of 2011. The company's 2012 development program calls for three additional rigs during the year, bringing the total to 24.

SEE: Oil And Gas Industry Primer

2012 Program
The company has budgeted $1.4 billion in capital for the Permian Basin, with approximately 20% allocated to acquiring more leaseholds. It will spend the balance on the development of existing and emerging plays here. It expects to drill more than 300 wells in the Permian Basin in 2012 and generate liquids production growth of 25% during the year.

EOG Resources (NYSE:EOG) also has a large development program planned for the Permian Basin in 2012. The company has 240,000 net acres and will drill approximately 112 net wells during the year.

SEE: What Determines Oil Prices?

Long-Term Program
Devon is planning an aggressive development program for the Permian Basin over the next five years, and will ramp up its operated rig count accordingly. The company will operate an average of 26 rigs in 2013, and reach 40 operated rigs by 2016.

This level of development is expected to generate compound annual growth rate (CAGR) in production between 20 and 25% through 2016. This growth rate will increase production to approximately 137,000 BOE per day by that year.

It has dozens of formations on its acreage, but plans to focus its development efforts on the Bone Spring, Delaware, Wolfberry, Wolfcamp and Cline Shales.

Other Operators
Concho Resources (NYSE:CXO) is a pure play Permian Basin operator and has more than 500,000 net acres under lease. The company has drilled 190 wells here over the last three years and plans to spend $1.37 billion to drill 390 wells here in 2012.

SEE: A Guide To Investing In Oil Markets

The Bottom Line
Devon Energy has chosen to focus its capital and energy on the Permian Basin as it seeks to increase crude oil and liquids production through 2016. The company's large acreage position here ensures that it will have its choice of locations and formations to drill.

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

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