Permian – update through January 2024

This interactive presentation contains the latest oil & gas production data from all 47,909 horizontal wells in the Permian (Texas & New Mexico) that started producing from 2001 onward, through January 2024.

Total Production

Permian tight oil production came in at 5.4 million b/d in January (after upcoming revisions, horizontal wells only), 2% higher than a year earlier. Natural gas production was 22 Bcf/d, representing an annual increase of about 10%.

In 2023 5,822 horizontal wells started producing, almost the same number as the year before (5,869), which was the highest ever.

Drilling Activity

Drilling activity in the Permian Basin has edged up again since the start of this year with the increase in WTI. Currently, 303 rigs are drilling unconventional oil wells in the Permian, or 2/3rds of the US total (source: Baker Hughes):

The number of data customers that Novi Labs has is growing fast, and many of these customers who are on the operational side have agreed to share data with us, especially completion and production data, which we call the Novi Data Network. A good portion of these customers have also allowed to republish data within our data products. In the Texas side of the Permian for example, we are now receiving production data from proprietary sources for over 1/3rd of the total unconventional oil production. This means that we don’t need to allocate lease-level production, which is the common way to estimate well level production data in Texas. Furthermore, that has allowed us to further finetune our lease allocation methods for the cases where we don’t have proprietary data. The result of all that is that not only is our production data way more accurate, but it also allows making far better production forecasts, which Novi Labs’ models were already very good at. As part of our data schema, customers can identify exactly which data came from proprietary sources. We’re excited that every month new customers sign up for this program.

Supply projection

The current level of drilling & completion activity should be enough to further expand the production capacity of the Permian Basin, all else being equal:

As you can see, the Delaware has become the most prolific part of the basin, and on the current trend would produce almost twice as much as the Midland by the end of the decade.

Well productivity

In the next overview you can find how well performance has developed over time in each of the subbasins of the Permian, as well as the key completion parameters (lateral length & proppant loadings):

Recent well results in the Midland basin have improved again, while you can still observe a negative trend in the Delaware basin in the past 2 years, based on the average cumulative oil production during the first 3 months.

Well performance is the result of many competing factors, including geology, completion designs and well spacing. Novi Labs’ analytics software allows operators to optimize these factors to improve overall economic outcomes.

Gas oil ratios

The Permian Basin is one of the few US basins where natural gas production is still rapidly growing, mostly due to its production next to the more profitable oil stream. This gas-oil ratio (GOR) is furthermore increasing over time, as the following charts reveal:

The top chart shows that for the selected wells the overall GOR has increased to over 4 MCF/bbl for the first time in January (yellow curve, right-hand axis). In the bottom chart the GOR curves are displayed by the year in which the selected wells started producing, and plotted against the number of months they have done so. Note that after about 4-6 years on average, the GOR has increased to 6 MCF/bbl.

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 2001, 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 changes 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 averaged 5.4 million b/d in January 2024, up 2% year over year after revisions.
• Permian natural gas production reached 22 Bcf/d in January 2024, representing an annual increase of about 10%.
• 5,822 horizontal wells started producing in 2023, nearly matching 2022’s record-high 5,869 wells.
• Baker Hughes data shows 303 rigs are drilling unconventional oil wells in the Permian, about two-thirds of the US total.
• Novi Labs receives proprietary production data covering over one-third of Texas Permian unconventional oil production, reducing reliance on lease-level allocation.
• Supply projections indicate current drilling and completion activity can expand Permian production capacity under otherwise equal conditions.
• Delaware is the most prolific Permian subbasin and is projected to produce almost twice as much oil as Midland by decade end.
• Permian GOR exceeded 4 MCF/bbl for the first time in January 2024, and averages about 6 MCF/bbl after 4–6 years of production.