Is the Permian Stalling?

Recent commentaries on the magic of the Permian miracle have had some dark musings about how the Permian is beginning to “stall.” Given all the back and forth in the investment community about “capital discipline” and output growing supply to the detriment of pricing, I thought I’d take a brief look at Estimated Ultimate Recovery (EUR) growth in the Delaware Basin to read the tea leaves. On a very gross level, median oil EUR across all reservoirs has improved year-over-year as shown below (EUR binned by year of first production, EUR data from Wellcast). A look at all wells identified by landing zones, with enough months of production to support reasonable EUR calculations over time, looks like this: The trend is pretty clear—by and large, well EURs have improved over time, although it looks as over the past 12-18 months the uptrend in improvements has moderated. This is probably due to downspacing and the potentially negative effects of parent-child well interference. Note however, that starting in early 2016 the number of wells that significantly outperformed the median values increased (outlined in red above). This “breakout” of superior performance may be a harbinger of better returns to come—unless the cumulative production… continue reading

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Source: CTRM Center

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