The Permian Basin | July 2021
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 7/9)
Active Drilling Rigs in Basin- 237
Total Rigs in Texas- 229
Total Rigs in United States- 479
Total U.S. Rigs up 86% YTD
Permian Top Producers
Top Gas Producer – OXY
Top Oil Producer – OXY
Permian Permitting Data
Permits Approved – 603
Plains All American to Merge with Oryx
According to a joint press release, privately held Oryx Midstream Holdings LLC and Plains All American Pipeline LP have agreed to consolidate a huge portion of their Permian Basin assets. It will create a debt-free joint venture called Plains Oryx Permian Basin LLC, which the businesses hope will produce $50 million in operational savings within the first 12 months and potentially reach over $100 million over time. The Midland-based Oryx Midstream operates under Stonepeak Infrastructure Partners and has evolved to become one of the largest privately-held midstream oil operators in the Permian Basin. It is estimated that the 4.1 million acres devoted to the Plains Oryx Permian Basin JV will have a crude pipeline capacity of 6.8 million barrels per day over a distance of 5,500 miles, with an average remaining contract term of around seven years.
Patterson UTI Acquires Pioneer Energy Services
Patterson UTI Energy is buying Pioneer Energy Services for $295 million. The Houston-based driller said the purchase price consists of up to 26,275,000 shares of its ordinary stock and $30 million in cash. Pioneer Energy Services’ entire debt will be retired as part of the deal. Patterson-UTI will add 16 super-spec drilling rigs to its existing fleet of 150 super-spec drilling rigs in the United States, as well as eight pad-capable rigs to its Colombian fleet. Subject to regulatory approvals, customary closing conditions, and stockholder approval, the acquisition is expected to close in the fourth quarter of 2021. Both Patterson-UTI and Pioneer Energy Services’ boards of directors unanimously authorized the acquisition.
Grenadier Energy Sells Midland Assets
As part of its acquisition, development, and exploration plan, Grenadier Energy acquired additional finance from longtime partner EnCap Investments LP on July 21. Grenadier said it will target acquisitions in the Lower 48 using a $350 million equity commitment from EnCap that was closed in June. A recent $420 million sale of a Midland Basin position to Surge Energy US Holdings Co. exemplified this strategy’s success, according to the business. A statement from the company’s president reads, “The team at Grenadier has a track record of purchasing high-quality assets and developing them to establish appealing businesses of scale.”
Kinder Morgan Recommends Another Pipeline
Natural gas pipelines might be built in the Permian Basin and Haynesville Shale in the next few years, according to Kinder Morgan Inc., which sees prospects to fulfill expanding export and industrial demand. According to the CEO of the pipeline company, Steven Kean, the Permian Basin in West Texas and eastern New Mexico is expected to require another gas pipeline by the middle of the decade. The Permian is the largest oil and gas producing shale field in the United States. Kinder Morgan initially proposed this idea in 2019 to transport gas from the Permian to the Gulf, but Waha hub prices were sometimes trading negative thanks to drillers who were producing more associated gas than the existing infrastructure could handle.
Pioneer Continues to Take Hedge Losses
In late July, independent Pioneer Natural Resources cautioned that it would be hit by an $832 million Q2 loss on derivatives. Combined with Q1, these losses total $1.523 billion in net losses from oil contracts. The company hedged a significant amount of its portfolio at prices lower than the current day. Q1 hedging losses across US oil firms were expected to face $7 billion in hedging losses according to Enverus. The company’s full second-quarter earnings were released on Aug 2.
Operators with Highest Permitting
Top Gas Producers (2020 cum)——————————–Top Oil Producers (2020 cum)
Counties with Highest Permitting (March)
Texas Oil Production
Texas Gas Production
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