Permian – update through August 2022

This is an older blog post, you will find one on more recent data here

This interactive presentation contains the latest oil & gas production data from all 38,199 horizontal wells in the Permian (Texas & New Mexico) that started producing from 2007/2008 onward, through August.

Total Production

Permian tight oil production was flat in August, at around 4.6 million b/d (after upcoming revisions, horizontal wells only). Not all this production is reported yet by the state agencies, thus the apparent drop in production in the above chart. Natural gas production was almost unchanged (after revisions), at just above 18 Bcf/d. You can view this by toggling the ‘Product’ selection to gas. Slightly more horizontal wells were completed in the first 8 months of this year in the Permian Basin (3263) compared with last year during the same time frame (3100).

Production sharing

Novi labs has entered production sharing agreements with several parties, which have accurate well-level production data (e.g. operators and mineral owners). Especially for Texas, where production data is provided by lease, and not by well, this makes a major difference in production data quality. For the Midland basin for example, more than 2,500 horizontal wells are in this dataset, together good for over 25% of recent tight oil production (and for Texas overall, 12% of recent tight oil production):

We continue to work with other parties in the coming weeks and months to increase participation in this program. Together with our best-in-class lease allocation, our production data for states like Texas is now at a very level of accuracy.

Drilling Activity

Drilling activity increased to the highest level in 2.5 years in recent weeks, to 335 horizontal oil rigs, as can be viewed in the following chart:

More than half (189 rigs) are active in the Delaware Basin. But we probably have not yet seen the impact of the recent drop in oil prices.

Well productivity

Well productivity has increased significantly in the Permian Basin over the past decade, with lateral lengths almost doubling during this period. After normalizing well production by lateral length, we find that well results have stagnated in recent years, in both the main subbasins:

The top chart reveals that well productivity, as measured by the cumulative oil recovered during the first year of production for every 10k feet of lateral length, appears to have plateaued since 2016. The bottom 2 charts show the increase in lateral lengths and proppant loadings during the same time frame.

We show in the following overview, which uses the same dashboard, these results for Pioneer Natural Resources, which is the largest shale operator in the Permian Basin, with close to half a million b/d of production:

As you can see in the top right chart, it’s normalized well results seem to have dropped since the end of 2018 (when it was using the highest proppant volumes per well), despite a small increase in average lateral length (see 2nd chart on the right side).

Productivity Ranking

In the following overview we can see a ranking of all the major shale operators in the Permian Basin, based on the same well performance metric as used above:

The chart on the right-hand side reveals the ranking of these operators, based on the average cumulative oil recovered in the first year, for every 10k feet of lateral length. Only horizontal wells that have begun production since 2016 are included, and only operators that completed at least 500 horizontal wells during this period. The map shows all the wells included, and are colored by the same performance metric. EOG scores the best results; its 1,400 horizontal wells recovered on average 283 thousand barrels of oil during the first year, for every 10k feet of lateral length. All the top 6 operators almost exclusively focus on the Delaware Basin.

Finally

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

Brief manual

The above presentations have many interactive features:

• You can click through the blocks on the top to see the slides.
• Each slide has filters that can be set, e.g. to select individuals or groups of operators. You can first click “all” to deselect all items. You have to click the “apply” button at the bottom to enforce the changes. After that, click anywhere on the presentation.
• Tooltips are shown by just hovering the mouse over parts of the presentation.
• You can move the map around and zoom in/out.
• By clicking on the legend you can highlight selected items.
• Note that filters have to be set for each tab separately.
• The operator who currently owns the well is designated by “operator (current)”. The operator who operated a well in the past month is designated by “operator (actual)”. This distinction is useful when the ownership of a well changed over time.
• If you have any questions on how to use the interactivity, or how to analyze specific questions, please don’t hesitate to ask.

Key Takeaways

• Permian horizontal tight oil production was flat in August at around 4.6 million b/d after revisions.
• Permian natural gas production was almost unchanged in August at just above 18 Bcf/d after revisions.
• Permian horizontal well completions totaled 3,263 in the first eight months versus 3,100 in the same period last year.
• Novi Labs’ production-sharing dataset includes more than 2,500 Midland Basin horizontal wells contributing over 25% of recent tight oil production there.
• Novi Labs’ production-sharing program represents 12% of recent Texas tight oil production in its dataset, improving well-level accuracy where Texas reports by lease.
• Permian horizontal oil rig activity rose to 335 rigs in recent weeks, the highest level in 2.5 years, per Baker Hughes.
• Delaware Basin activity accounted for 189 of the 335 horizontal oil rigs, representing more than half of the Permian total.
• Normalized first-year oil recovery per 10,000 feet of lateral length plateaued in both Delaware and Midland basins after 2016 despite longer laterals and higher proppant loadings.