ExxonMobil Corp. (NYSE: XOM) plans to go deeper in the Permian Basin as it ramps up activity and works to satiate a growing appetite for more rapid value creation across the basin’s entire integrated value chain.

“Our leading presence in the Permian from equity production to Gulf Coast refining and chemicals capacity positions us for world-class development across the value chain,” Jeff Woodbury, vice president of investor relations for ExxonMobil, said during a conference call Oct. 27.

The company also intends to test 3-mile lateral wells in the Delaware Basin with an aim of reducing unit development cost to $5 per barrel of oil equivalent (boe) from $7 per boe.

Third-quarter 2017 action included a Permian bolt-on that added 22,000 operated acres for roughly $400 million to the company’s portfolio. The quarter also included the acquisition of a Delaware Basin crude oil terminal from Genesis Energy in Wink, Texas—the company’s first in the Permian, as well as growing logistics in support of refining and chemical business, ExxonMobil said in its latest quarterly report.

The acreage and infrastructure moves follow the formation earlier this year of the Permian Express Partners pipeline joint venture with Energy Transfer Partners and an agreement with Summit Midstream Partners to create a natural gas gathering and processing system to serve ExxonMobil’s Permian production.

“It’s just not a pure Permian play. It’s the full value chain from resource all the way to molecules to the customers—whether it be refined products or chemical products,” Woodbury told analysts during the call. “ One of the things we continue to look is where is the value leakage across that value chain and do we add value with that, and if we do that’s what we’ll play into our strategy in how we capture incremental assets across that value chain.”

Improved commodity prices and strengthened business performance, including stronger upstream and downstream results, fueled ExxonMobil to a 50% jump in quarterly profit despite a $160 million impact from Hurricane Harvey. Upstream earnings jumped to $1.6 billion, boosted by higher commodity prices, up $947 million. In all, ExxonMobil beat expectations with a net quarterly income of $3.97 billion, up from $2.65 billion a year ago.

ExxonMobil’s series of third-quarter acquisitions and acreage trades in the Permian—both the Delaware and Midland basins—added more than 400 MMboe to the company’s existing 6 Bboe Permian resource base. Acquisitions made by the company since its first-quarter Delaware acquisition total about 22,000 operated acres with an implied cost of about $20,000 per acre.

“This acreage is contiguous to our core positions making it ideal for capital efficient development using long lateral wells,” Woodbury said, adding that the company is targeting “industry-leading unit development costs.”

This year Exxon’s Midland horizontal wells have averaged about 10,000 ft, which Woodbury noted was above the industry average. ExxonMobil recently brought on production its first 12,500-ft lateral in the Delaware.

“By leveraging our learnings in the Bakken where we recently fractured the first of several 3-mile laterals, we’ll start drilling our first 3-mile lateral in the Permian before year-end,” Woodbury said.

The company intends to continue growing a contiguous acreage position.

The buildup in the Permian allows the company to use its technology capabilities; however, “it’s not just about how we execute. It’s all about how do we extend best–in-class performance. Clearly, what we’re trying to do is leverage our full technological capability to achieve the lowest unit cost and then capture the highest value from the barrels through the full value chain [and] ultimately to the customer.”

ExxonMobil’s research in this area is focused from the reservoir to the hardware, he added, as the company looks to make a step-change in development.

“We’ll continue to incorporate learnings to lower unit costs as we grow our unconventional liquids at a 20 percent compounded annual growth rate through 2025 underpinned by a near-term annual growth in the Permian of about 45%,” he added.

The company’s total unconventional production from the Delaware, Midland and Bakken basins for the quarter was more than 200,000 boe/d.

ExxonMobil also anticipates further growth in rig count, with plans to increase its operated rig count in the Permian to about 30 by year-end 2018 from today’s 20. Additional rigs could be added, though improved efficiencies from rigs and drilling operations will be a factor.

“If you look at the rig counts right now in the Lower 48 while they’re down more than 50% that’s not an equivalent reduction in overall activity because these rigs are much more productive today than they were back in the peak periods,” Woodbury said.

Worldwide, ExxonMobil reported a 2% increase in production on an oil-equivalent basis from a year ago. Liquids production rose by 69,000 bbl/d to 2.3 million barrels per day with less downtime and higher volumes offset by field declines. Natural gas production, however, fell 16 million cubic feet per day to 9.6 billion cubic feet per day on lower demand and field decline.

Velda Addison can be reached at vaddison@hartenergy.com.