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The Dirt on the Permian Basin: Hot or Not?

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The Dirt on the Permian Basin: Hot or Not? PART 1 OF 13

What’s New in the Permian?

Permian trend updates

In a previous Market Realist series, we discussed the charm that has producers flocking to the Permian Basin. In this series, we’ll take a look at the recent and updated trends in the Permian.

According to the EIA’s (US Energy Information Administration) latest DPR (Drilling Productivity Report) on June 12, 2017, crude oil production in the Permian was forecast to average 2.4 million barrels per day in June 2017. Production in May was roughly the same. For July, production is expected to rise to ~2.5 million barrels per day.

What’s New in the Permian?

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The EIA noted in a report released on April 26, 2017, that “as production in other regions fell throughout most of 2015 and 2016, the Permian provided a growing share of US crude oil production.”

The above chart compares oil production in the Permian with the Eagle Ford and the Bakken between January 2016 and January 2017. Key Permian players include Apache (APA), Concho Resources (CXO), and Chevron (CVX).

The EIA’s June 2017 DPR showed that DUC (drilled but uncompleted) wells for the seven regions (Bakken, Utica, Eagle Ford, Permian, Niobrara, Marcellus, and Haynesville) grew by 176 in April 2017, to 5,946 in May 2017. The Permian alone added 125 DUC wells and surpassed other regions. The region that added the second-highest number of DUCs in December was the Eagle Ford, adding 48 DUC wells in May.

DUC wells are an important indicator as they determine future oil and gas production from a particular region. In the next part (below), we’ll take a closer look at recent Permian rig activity.

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