Permian Basin News Pulse October 2022

Posted: December 7, 2022

The Permian Basin |October 2022

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- 350 (+4)
Total Rigs in Texas- 371 (+6)
Total Rigs in United States- 784 (+15)
Total U.S. Rigs – 38% YTD

Top Producer by BOE – Pioneer

Permian Permitting Data
Permits Approved – 483

Basin Highlights

$1.6 Billion in Oil and Gas Assets Sold in Permian Basin Merger as Market Recovers

Diamondback Energy has announced the purchase of FireBird energy for $775 million in chas and $825 in Diamondback stock. This deal includes 75,000 acres in the Midland basin and 22,000 boe/d. This acreage includes 353 earmarked drilling locations. Diamondback also announced plans to sell off $500 million of assets to reduce debt and offset some of the expense incident to purchasing the FireBird acreage. Diamondback has just under 400,000 net acres in both the Midland and Delaware Basins.

US Permian Oil Production Forecast to hit Record in November (EIA)

The Permian Basin is set to break both oil and gas production records this month. The EIA estimates that oil production is set to rise 50,000 bopd to 5.453 million bpd in November and that gas is set to increase 600 MMscfd to 95.1 bcfd. The Permian is one of only a few basins expected to break its late-2019/early-2020 oil production record. The US is on track to break its current production record in 2023 or 2024 that was set in 2019 at 12.23 million barrels per day on average.

ExxonMobil, Chevron Each See Slightly Lower 2022 Permian Basin Output than Expected

ExxonMobil forecasted a 25% growth of production in the Permian Basin in 2022 but instead will likely observe only a 20% growth in production. A near depletion of DUC inventories and supply chain issues are among the reasons that the production growth has underperformed. Chevron, too, saw a production growth that was less than expected for 2022. In Q3 of 2022, Chevron produced 708,000 boed from the Permian, and in Q3 of 2021, Chevron produced 646,000 boed in the Permian. Both companies have been vocal about increasing both total Permian production and the fraction of their portfolio’s total production from West Texas/SE New Mexico.

Permian’s Limited Natural Gas Takeaway, Fewer DUCs Signal Lower Oil Output

In the middle of 2020, the Permian Basin had nearly 3,500 DUCs. Today, there are only about 1,000 DUCs in the basin. The number of DUCs in the basin prior to mid-2016 had hovered at around 1,000. The rate at which DUCs has declined dramatically in the last two months as the built-up supply of DUCs in the basin has returned to the normal ~1,000 number. This depletion of DUC inventories and the slowing rate at which rigs are being picked up might be an indication that oil production growth in the Permian Basin is set to slow in the coming months.

Operators with Highest Permitting


Top Oil Producers—————————— –

RankCompanySeptember Production (MBO)

Counties with Highest Permitting

1Lea (NM)81
2Martin (TX)67
3Midland (TX)56
4Reeves (TX)50
4Eddy (NM)49

Rig Count

Texas Oil Production

Texas Gas Production

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