The Permian Basin | August 2020
Field Overview
Located in West Texas, the Permian Basin has been producing oil for over 100 years. It leads the US in oil production and estimates put 43 billion bbl of oil still in the Permian; 80% of those reserves are believed to be at less than 10,000 feet. Some top formations are the Wolfcamp, Upper/Lower Spraberry, and the Leonard.
State Drilling Statistics (End of August)
Active Drilling Rigs in Basin- 125
Total Rigs in Texas- 107
Total Rigs in United States- 254
Total U.S. Rigs down 72% YTD
Permian Top Producers
Top Oil Producer – Diamondback Energy
Top Gas Producer – Cimarex Energy
Financial & Economic Updates
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Not a lot of financial information to be presented this month within the Permian outside of mass restructuring. We encourage you to navigate to the periodicals page, or listen to a podcast that we have uploaded recently to supplement your knowledge of the industry in the present.
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State Highlights
Rigs are in Season Again
The month of August was host to the first United States positive rig count since the beginning of COVID. Texas of course, saw huge benefits no thanks to the Eagle Ford. Overall, the state rig count went up 8 rigs with the Permian increasing 10 and the Eagle Ford decreasing 2. This increase in rig count is riding right off the increase in prices as August saw prices as high as $42. An increase in price means that there are more people who are able to turn a profit and justify production costs. The most worrisome part? Hoping the price increase will continue.
Full Steam Ahead
It is no secret that Texas was guilty of flaring an absurd amount of gas in the past, but to make use of that, Kinder Morgan has been attempting to construct a 430 mile 42 inch pipeline to take that wasted gas to markets. Even though it will prevent gas from being needlessly flared, it continues to face plenty of opposition from multiple parties. Residents of Texas Hill Country joined forces with environmental groups to highlight an incident where drilling fluid was spilled in the Blanco River as the pipeline was being built beneath. To accommodate them, Kinder Morgan announced plans to build the pipeline around the river. Next, the Sierra club filed a motion in April to stop the construction of the pipeline citing current and future damage that the project would cause to the environment. The motion also claimed that the Army Corps of Engineers did not complete proper environmental analysis. US district Judge Robert Pitman for the Western District of Texas said the Sierra club had not demonstrated adequate future impacts as the pipeline should be operating by next year. He stated, “Granting an injunction at this stage would not ‘un-ring the bell.’ Harm that is ‘extremely unlikely to occur’ is not a ‘definitive threat of future harm’ warranting a preliminary injunction.” Sierra Club Staff Attorney Joshua Smith said, “We are disappointed that the court declined to put an immediate stop to this illegal construction…” and also referred to the project as a “…dangerous fracked gas pipeline.”
Top Oil Producers (2020 cum)
| Rank | Company | Production (Bbl) |
| 1 | Diamondback | 44,378,526 |
| 2 | Pioneer | 38,829,455 |
| 3 | XTO | 38,571,594 |
| 4 | COG | 26,797,612 |
| 5 | Endeavor | 23,618,782 |
Top Gas Producers (2020 cum)
| Rank | Company | Production (Mscf) |
| 1 | Cimarex Energy | 112,243,812 |
| 2 | Apache Corp | 95,926,125 |
| 3 | Anadarko | 83,755,463 |
| 4 | Chevron | 65,080,510 |
| 5 | EOG | 62,293,171 |
Refining
Texas Oil Production
Texas Gas Production
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The information contained in this newsletter is provided by RARE
PETRO Engineering, PLLC via the following sources unless otherwise
noted:
www.eia.gov
www.drillinginfo.com
www.bhge.com
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