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The Permian Boasts Lower Break-Even Than All Other Plays

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Break-even cost analysis

The Permian Basin boasts of one of the lowest break-even costs, as you can see in the below graph. The STACK (Sooner Trend Anadarko Canadian Kingfisher) and DJ Basins also boast low break-even costs. The SCOOP (South Central Oklahoma Oil Province), Eagle Ford, and Bakken have higher break-even costs.

Key players in the STACK basin include Newfield Exploration (NFX). Anadarko Petroleum (APC), Noble Energy (NBL), and PDC Energy (PDCE) are key players in the DJ Basin. Notably, these companies make up ~10% of the iShares US Oil & Gas Exploration & Production ETF (IEO).

So given what we’ve discussed in Parts 1 and 4, it shouldn’t be surprising that oil and gas producers have been scrambling to add Permian acreage to their portfolios. In 2016 and now, at the start of 2017, we’ve seen notable deals in this basin. We’ll discuss this further in the next part.

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