October 2018 Exclusive Story
Oil Production, Refining Output Hit New Heights
It’s almost as if Tim Leach was born to be an oilman in the Permian Basin. It may have taken him a while to realize it, but once he got to Midland, he never left, and his company is not likely to leave either.
Leach is chairman and chief executive officer of Midland-based Concho Resources, one of the nation’s largest oil and natural gas producers. The son of a petroleum engineer, Leach says he always wanted to build his own business, but oil was not necessarily part of that dream.
Born in 1959, he followed his father to various oil-producing regions throughout the United States, and eventually settled with his family in Houston, where he attended high school before moving on to Texas A&M to study petroleum engineering.
Although oil was in his blood, Leach says he never intended to follow his father into the industry, but during the boom of 1978, there were plenty of scholarship opportunities for students enrolled in A&M’s petroleum engineering program. Leach says he figured he could start in petroleum engineering and change to mechanical engineering later. But after only one semester with his professors, he realized petroleum engineering was a natural fit.
His road finally reached Midland in 1982, when he graduated and went to work for Midland National Bank. Taking night classes, he earned an MBA from the University of Texas of the Permian Basin in 1984. Ultimately, Leach became the bank’s executive vice president in charge of oil and gas lending.
The final step toward his destiny came in 1989, when Leach accepted a position with Parker & Parsley, a small Midland-based oil company focused on Permian Basin production. Serving as the company’s president of engineering, he began formulating a business model that he eventually used as part of a four-man partnership that established Concho Resources in 1997 as a Midland-based company that would focus exclusively on the Permian Basin.
Having established roots in Midland, the partners wanted their new company to be an asset to the community, Leach says.
“I have lived through several ups and downs in the oil and gas business, and we wanted to build a company that was sustainable, that would provide jobs and returns for shareholders,” he describes. “We wanted to build something that really had not existed to that point and was headquartered in Midland.”
So, they established the company with a business philosophy that valued quality assets, good people, strong operational results, and a solid balance sheet. “We talked about those things on day one at Concho, and 20 years later, we still are talking about those things,” Leach notes.
Today, Concho has 1,500 employees, is a leading Permian Basin operator, ranks among Texas’ top 12 oil producers, and is New Mexico’s top oil producer. Concho operates more than 6,000 wells and has enough reserves to sustain its current drilling program for multiple decades. Leach describes Concho as a pure-play operator, committed to the Permian Basin, where technological advancement continues to unlock opportunities for new production.
He says the company has kept an eye on hot resource plays across the country, but it never found any that would compare with the Permian or offer the efficiencies associated with a Midland headquarters. “We always were fascinated with the size and scope of what we have had in the Permian,” he affirms.
During the next decade, the Permian will represent two-thirds of the nation’s oil production growth, Leach estimates. Permian production enables U.S. oil exports, ending the era in which the country was held hostage by oil imports. Furthermore, he reflects, the Permian’s economic benefit to Texas and the United States is remarkable.
“The fact is that the Permian is making more than 3.4 million barrels of oil a day, and production is on an upward incline,” Leach reports. “Everybody now thinks that by 2025, the Permian will hit 6.0 MMbbl/d.”
That growth trajectory comes from technological advances ushered in by the shale revolution. Horizontal drilling was the inflection point, he says, but there have been other innovations. They include advancements in hydraulic fracturing, and complex drilling and development schemes that use large drill pads where wells target multiple landing zones. They all contribute to substantial Permian production growth.
“I feel like growth in the Permian only will accelerate in the future, and we are really happy that we are located in the middle of the action,” he relates.
In addition to leading Concho, Leach says he is dedicated to supporting organizations that sustain growth and quality of life within the Midland community.
He serves on the Board of Governors for the Midland Memorial Foundation, the Board of Directors for the Midland College Foundation and the Scharbauer Foundation. He also is on the Advisory Board for the Caesar Kleberg Wildlife Research Institute. In 2017, he was awarded the Texas Oil & Gas Association’s Distinguished Service Award.
Leach and his company emphasize community, he says, which is why Concho joins other companies to support quality of life initiatives, such as the subsidy it provides to Bright Horizons’ childcare center, which cuts hundreds of dollars from the monthly cost working parents must pay for childcare.
“All of us work very hard to try to help this community keep up with all the growth brought about by the shale revolution,” he says. “Concho is a leader in that, trying to make sure we attract people to come work in the Permian Basin. To do that, we need good schools, good hospitals and safe roads. That is a big challenge; it may be our biggest challenge.”