After several years of consistent growth fueled by a combination of acquisitions and organically drilling new wells, BreitBurn Energy Partners, L.P. (NASDAQOTH:BBEPQ) hit a brick wall in 2015. Oil prices crashed 50%, forcing the company to cut its 2015 capex program from the original $600 million to a much reduced budget of just $200 million, just enough to basically maintain its production. Further, given the company's already tight leverage, it has its hands tied on acquisitions for the time being. All that being said, while its growth is limited at the moment, when conditions improve the company already has its eyes on one key area to drive growth in the future.

Central focus
At a recent industry conference BreitBurn's CEO Hal Wasburn discussed the company's future growth plans by pointing to a map of the country, which highlighted the company's seven core areas.

Source: BreitBurn Energy Partners, L.P. Investor Presentation. 

He said:

When you look at Breitburn today we're in seven key producing areas but I really want to focus you on the center of the United States. The Mid-Continent, the Permian Basin and the Ark-La-Tex which combined represent more than half of the business today. We have over 30,000 barrels a day of production and we have over 160 million barrels of proved reserves in this area. This is really important to Breitburn and to Breitburn's future. This is the core of the oil and gas industry onshore in the United States from our perspective, from the business that we like to run, the acquire and exploit. And by having this strong foothold, in fact our business here is bigger than most of our peers in total, by having this strong foothold we allow ourselves to continue to grow through acquisitions and exploitation.

As Washburn points out, the middle of the country is already vitally important to the company as half of its production and reserves are located in that region. There's a reason for this: this region just happens to be the core area for the onshore oil and gas industry. Because there is still so much oil and gas left in the middle of the country, it's likely that there will be plenty of opportunity for BreitBurn to acquire underutilized properties and exploit them by investing to develop them to their full potential.

The sweet spot
While the middle of the country is important to the company's overall growth, there was one area in the middle that Washburn pointed out that BreitBurn is really excited about. This area is highlighted on the map below, which shows the company's acreage in the Permian Basin.

Source: BreitBurn Energy Partners L.P. Investor Presentation

In discussing this map, Washburn noted:

So when we look at our acreage across the Midland -- across the Permian Basin with a real focus on the Midland Basin and the area that I have outlined in green here. We will develop this acreage. This acreage is of tremendous value.

Washburn then notes that the area in red is where the company really has a concentrated acreage position, so that's a key area. However, all of the acreage outlined in green is prime real estate, as it contains up to six layers of oil-baring rocks.

The company sees the potential for upwards of 618 net horizontal wells to be drilled in that general area. That's a lot of wells considering the fact that the company isn't currently drilling any horizontal wells in the region at all. It is actually too many wells for the company to develop internally due to the cost of horizontal wells and the fact that the production from these wells declines rapidly, making them a less than ideal fit for the company's MLP model. Still, despite those drawbacks the region has the potential to drive a lot of growth -- the company could be creative and trade some of the acreage for wells that are a better fit for its MLP model, or it could find a financial sponsor to fund the development in exchange for a cut of the production. Either way, exploiting this area is expected to drive a lot of future growth for BreitBurn.

Investor takeaway
BreitBurn Energy Partners has been hurt by oil prices, which forced it to slam the brakes on growth. However, once conditions improve the company knows right where its growth will come from, as it has its eyes squarely on some very valuable oil real estate in Texas' Permian Basin.