The Permian Basin
The Permian Basin is in western Texas and southern New Mexico. The “Permian Basin” usually refers to a combination of the Delaware Basin and the Midland Basin. According to the U.S. Energy Information Administration (or EIA), the Permian Basin is the largest crude oil–producing region in the US.
Comparing Permian Basin rig counts with other basins
Currently, there are 1,572 oil rigs at work in the US. The Permian Basin has 560 of these rigs. It has more rigs than any other region. The Eagle Ford has 195 oil rigs. The Williston and the Bakken have 190. The Mississippian has 71.
In 2014, the Permian Basin added 101 oil rigs. In comparison, only five were added in the Williston and the Bakken. The DJ-Niobrara shale and the Cana Woodford shale in the Anadarko Basin added 13 and 20 rigs in 2014, respectively.
Last week, Permian oil rigs increased by two from the previous week. Horizontal rigs account for 62% of the Permian Basin’s total. Vertical rigs account for 36%. Directional rigs account for ~2%.
In comparison, on November 25, 2011, there were 475 rigs. Only ~22% of the rigs were horizontal. At the time, rigs in the Permian Basin were mainly vertical. Vertical rigs accounted for ~76% of the rigs in the Permian Basin. Directional rigs accounted for ~2%.
In the next part of this series, we’ll discuss how the rig trajectory mix changed.
Key stocks and exchange-traded funds (or ETFs)
Rig counts in the Permian Basin can gauge upstream companies’ drilling activity in the Permian Basin. These companies include Laredo Petroleum (LPI), Concho Resources Inc. (CXO), EOG Resources Inc. (EOG), and Cabot Oil & Gas (COG). Some of these companies are part of the S&P Oil & Gas Exploration & Production ETF (XLE).