The Permian Basin | May 2020
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 May)
Active Drilling Rigs in Basin- 148
Total Rigs in Texas- 127
Total Rigs in United States- 301
Total U.S. Rigs down 69% YTD
Permian Top Producers
Top Gas Producer – Apache
Top Oil Producer – Pioneer
Financial & Economic Updates
Majors Looking to Limit Permian Production
Everyone is struggling amidst the depressed pricing, and not even the majors are safe. At the end of the first quarter, ExxonMobil recorded $610 million in losses. This is the first quarterly loss since 1988, way back before it had merged with Mobil. ConocoPhillips also reported a loss to the tune of $1.7 million. Chevron Corp reported a $3.6 billion dollar profit thanks to improved financing at refineries, but did warn that it would be cutting production in the Permian. Majors have finally come to the realization that this will affect everyone much longer than initially anticipated. Even Shell cut its shareholder dividend for the first time in decades. Unfortunately, plenty of majors include the Permian Basin within their production portfolios and will tailor their plans toward limited production. Chevron plans to wean off by about 125,000 barrels per day overall, and Exxon will shut down at least 75% of its drilling rigs by the end of the year. This report came from early on in the month with low oil prices.
Permian Poised to Float Better than Eagle Ford
By the end of May, many states began to lift restrictions on travel and business interactions. Domestic oil prices had rebounded to the low $30 range, and things were beginning to look up. Despite companies planning huge cuts within the Permian a week before, production was cut by only 87,000 barrels per day. This means the Permian had experienced the lowest rate of decline for the month among the major basins. Although this was one of the largest falls in magnitude, it only accounts for about 2% of the total production. By comparison, the Eagleford fell 36,000 barrels per which accounted for 3% of its production. The Permian also holds the largest share of rigs in the US with 162 rigs at the end of the month with the next highest being the Haynesville Shale in Arkansas at 32 rigs. This report came from the end of the month with improved oil prices.
Top Gas Producers (2020 cum)
(MMscf / Month)
Top Oil Producers (2020 cum)
Texas Oil Production
Texas Gas Production
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