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Permian – update through November 2020

These interactive presentations contain the latest oil & gas production data from all 28,999 horizontal wells in the Permian (Texas & New Mexico) that started producing from 2008/2009 onward, through November.

Permian-152433.png

Visit ShaleProfile blog to explore the full interactive dashboard

Total Production

Permian tight oil production rose in November by 1% m-o-m to ~3.8 million bo/d (after upcoming revisions). Natural gas production is with 14.8 Bcf/d close to a record level and the basin is now about 25% gassier than 2 years ago, as fewer wells came online last year(new wells start with a low gas-to-oil ratio). I expect that this trend will continue as the basin continues to age, simply because the gas-to-oil ratio for older wells is even higher (~6 Mcf/bbl after 5 years on average).

Supply Projection

Since our update on this basin last month, another 22 rigs returned here to drill horizontal wells (to 193 as of last week according to Baker Hughes). As you can find in our Supply Projection dashboard, this number can sustain current production levels in the long-run assuming constant rig & well productivity:

Supply-Projection.png

Tight oil outlook in the Permian, by state, based on current drilling activity & productivity

This also means that with the recent increase in oil prices and thus probably more rigs returning to this area, we might soon start to see rising output again.

For example, in the following scenario in which I’ve assumed that the rig count would gradually grow to 300 by the end of this year and stay there (and again assuming no changes in productivity), production would rise to well over 5 million bo/d in a couple of years:

Supply-Projection-300-rigs.png

Tight oil outlook in the Permian assuming 300 rigs by end of 2021.

You can create your own projections for any area and for both tight oil & gas in our subscription service.

Top Operators

In the final tab (“Top operators”) the production and well positions are displayed for the 10 largest producers in the Permian. Normally we base this metric on the past 12-months output, but now we only chose the last month, as there have been some significant changes. Not all recent M&A activity is yet reflected here, but 2 big ones are clearly visible; Pioneer is now the biggest operator after devouring Parsley and ConocoPhillips got to the 2nd place after it acquired Concho Resources. Occidental completed few wells in 2020 and has now suddenly dropped 3 places.

Which of these operators have the better wells? In the next overview, taken from this dashboard in the Professional version of ShaleProfile Analytics, we can see the performance of all the horizontal wells these operators currently operate in the Permian Basin over time, based on the average cumulative oil recovered in the first 18 months, normalized by a 1,000 ft of lateral length”

Productivity-over-time-1.png

Well performance of the top 7 operators in the Permian, by average normalized cum. oil in the first 18 months. Hz. oil wells since 2013 only.

On this metric, EOG is clearly in the lead, as it completes rather short laterals in the Delaware Basin, which it completes with over 2,000 pounds of proppants per lateral foot on average, well more than most competitors do.

Advanced Insights

The ‘Advanced Insights’ presentation is displayed below:

Adv.35.png

This “Ultimate recovery” overview displays the average production rate for these wells, plotted against their cumulative recovery. Wells are grouped by the year in which production started.

The more modest improvements in performance since 2016 are visible here.

Finally

We will have a new post on the Eagle Ford later this week.

Production and completion data are subject to revisions.

Note that a significant portion of production in the Permian comes from vertical wells and/or wells that started production before 2008, which are excluded from these presentations.

Sources

For these presentations, I used data gathered from the following sources:

  • Texas RRC. Oil production is estimated for individual wells, based on a number of sources, such as lease & pending production data, well completion & inactivity reports, regular well tests, and oil production data.
  • OCD in New Mexico. Individual well production data is provided.
  • FracFocus.org

Visit our blog to read the full post and use the interactive dashboards to gain more insight: https://bit.ly/3djZavs

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