The Permian Basin |May 2023
Field Overview
Located in West Texas, the Permian Basin has been producing oil for over 100 years. The Permian leads the US in oil production and analysts estimate that there is 43 Gbbl of oil still in the Permian; 80% of reserves in the basin 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
Active Drilling Rigs in Basin- 341 (
-2)
Total Rigs in Texas- 345 (-12)
Total Rigs in the United States- 682 (-32)
Total U.S. Rigs 10.4% YTD
Top Oil Producer – Occidental
Permian Permitting Data
Permits Approved – 758
Basin Highlights
$141M Permian Basin Oil and Gas Deal Finalized as More Companies Move Into Region
Kimbell Royalty Partners completed a deal mid-May on 60,000 acres in Howard and Borden Counties. The asset includes 806 royalty acres, 5.3 million barrels of proved reserves, three active rigs, and 300 producing wells. Another firm, Epsilon Energy, based in Houston, announced a deal wherein it will purchase a 25% interest in 12,373 acres in Ector County for $14 million. This follows their recent election to participate as non-operated working interest partners in several Delaware Basin projects recently.
*US Permian Natgas Flaring Could Rise in 2024, Report Says
The EIA recently published a report showing that natural gas production in the Permian Basin is set to outpace the increase in pipeline capacity, inevitably leading to increased flaring in the basin. Presently, the Permian is producing 5.7 million barrels of oil per day and 22.5 billion cubic feet of gas per day. Justin Carlson, chief commercial officer at energy consulting firm East Daley Analytics, said that natural gas takeaway capacity can be restricted by “commercial and regulatory reasons”. New pipelines are slated to come online by May of 2024, which will likely put at least nameplate takeaway capacity ahead of natural gas production in the basin.
Vital Energy Signs $540M Deal to Buy Assets in Permian Basin
Vital Energy has signed a $540M deal to purchase 70% of EnCap’s Forge Energy II’s Delaware Basin assets and will retain operating control. A third party will purchase the other 30% of the interest for $162M. This will increase Vital Energy’s holdings in West Texas by 42,000 gross acres to a total of 198,000 acres. The acreage is in Pecos, Reeves, and Ward Counties.
Expert Says Permian Basin Economy is Holding Strong
Mickey Cargile of Cargile Investment Management, a wealth management firm headquartered in Midland, was optimistic about the Midland economy in a recent interview. Commodity prices have fallen from 2022 highs, but WTI has held steady at $70/bbl for several months, which has lent some stability to the West Texan economy. Cargile indicated that unemployment is 2.8% in Midland, indicating that there are more jobs than workers.
Operators with Highest Permitting
| Rank | Company | Permits Approved |
| 1 | Exxon | 63 |
| 2 | Occidental | 43 |
| 3 | Devon | 42 |
| 4 | Endeavor Energy | 36 |
| 5 | Blackbeard Operating | 33 |
Top Oil Producers—————————— –
| Rank | Company | Monthly Production (MBO) |
| 1 | Occidental | 27,361 |
| 2 | Pioneer | 14,226 |
| 3 | Apache | 12,173 |
| 4 | Exxon | 12,033 |
| 5 | ConocoPhillips | 10,114 |
Counties with Highest Permitting
| Rank | Company | Permits Approved |
| 1 | Lea (NM) | 143 |
| 2 | Midland (TX) | 91 |
| 3 | Martin (TX) | 78 |
| 4 | Loving (TX) | 73 |
| 5 | Eddy (TX) | 69 |
Rig Count
Texas Oil Production
Texas Gas Production
Click above to subscribe to the RARE
PETRO Podcast Network or visit
www.rarepetro.com/podcasts
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
RARE Petro Analytics