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Permian Is Most Actively Drilled followed by Anadarko, Eagle Ford

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Permian’s rig counts have increased the most

Spanning western Texas and southeastern New Mexico and boasting many prolific tight oil formations such as Wolfcamp, Spraberry, and Bonespring, the Permian Basin has developed into one of the most active drilling regions in the United States.

As rig counts have rebounded from the decreases that occurred in 2015 and 2016, producers have increasingly been focusing on the Permian region, with the highest number of monthly rig counts among all regions, as we can see in the above image. The Anadarko and Eagle Ford regions have shown the second- and the third-highest monthly rig counts.

According to the EIA (U.S. Energy Information Administration), the Permian region is larger and has more potential for oil production than any other region. Total production and production per new well have increased in the Permian for 11 consecutive years.

Drilling productivity report for May

In its May drilling productivity report, the EIA said that in June, oil production is expected to rise by 78,000 barrels per day in the Permian compared to May. The region with the second-highest production growth forecast is Eagle Ford, where production in June is expected to grow by 33,000 barrels per day compared to May.

Key Permian players include Occidental Petroleum (OXY), Apache Corporation (APA), and Chevron (CVX). OXY’s production from its Permian Resources segment increased 37% YoY (year-over-year) in Q1 2018. APA’s production in the Permian increased 24% YoY. CVX’s Permian production grew 65% YoY in Q1 2018.

Key exploration and production producers in the Eagle Ford Shale include Chesapeake Energy (CHK), whose production in the region increased 25% YoY in the first quarter, and Marathon Oil (MRO), whose Eagle Ford production grew 5% YoY in the first quarter.

Total oil production at major US shale plays (Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara, and Permian) is expected to rise by 144,000 barrels per day in June compared to May, implying that ~54% of this growth will come from the Permian Basin.

In the next article, we’ll read more about trends in rig counts and new-well production in the Permian.

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