The Permian’s Changing Landscape
With the turn of the calendar to 2019, a perfect storm quietly brewed over the nation’s most prolific oil basin. For all the record-breaking output of crude in the Permian, the ginormous acreage grabs and price tags, and the visceral anticipation by E&P shareholders, clouds quickly gathered. Reese Energy Consulting today is studying the turnabout in what is arguably the most heralded star of the new energy renaissance—the mighty Permian Basin. Over the last three years, crude production there has doubled as independent producers scrambled to own a piece of the Golden Goose. Investors backed their drilling programs with reams of money. The name of the game became drilling more, and the number of rigs soared as did the debt and overhead of many independents battling a lack of midstream infrastructure and declining oil prices. Enter 2019 and a loud edict to slash costs, reduce debt, focus on earnings growth, and consolidate. These are the new rules in the Permian, which may already be seeing signs of a slowdown as independents look to ramp up their share prices.