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Just How Big Is the Permian Basin?

The Permian Basin gets all the headlines these days, and it’s all about stacked pay opportunities across the cores of the Delaware and Midland Basins.  Acreage valuations have gone sky high and now concerns are emerging about oil and gas infrastructure and whether all of the basin’s operators can execute their drilling plans.  With the frothiness (as highlighted in other recent Energy Market Commentary coverage) has come a trend for operators to talk about ‘effective horizontal acres’ which of course is a synthetic acreage measure which takes net surface acreage times the number of stacked play opportunities to get a much larger acreage number.  A convenient tool for investor relations teams. Considering this trend, the question remains using this line of thinking, just how big is the Permian Basin?


As shown above, using RSP Permian’s metrics for net surface acres and net effective horizontal acres, the company is targeting 6 stacked pay opportunities in the Delaware and 4 opportunities in the Midland Basin.  Similarly, if we look at Diamondback’s investor relations coverage of the Delaware and Midland, we see they suggest 7 and 5 stacked pay opportunities, respectively, in the Delaware and Midland Basins.


So the question remains, if we translate all this stacked pay opportunity into surface area, exactly how big would the Permian be?  For the sake of this commentary, we will make some assumptions such as: 1) the greater Permian Basin is made up of the Delaware and Midland Basins only, 2) the stacked pay in the Delaware and Midland Basins extends across the entirety of both basins.

As it turns out, the area of the Delaware Basin is 8,465 square miles while the Midland is 7,385 square miles which are both close to the size of New Jersey at 8,722 square miles – as shown below.

However, if we use the combination of RSP Permian’s concept of effective horizontal acres and we use Diamondback’s stacked pay count for the Delaware and Midland Basins, we get to a surface area of 96,200 square miles.  So how big is the Permian Basin? To put this in perspective this is about the same size as Wyoming….or the United Kingdom….or the entire area of West Texas (as shown in green above)….or greater than the great State of Oklahoma.

As we all know, operators have been sticking to drilling the core of plays since oil prices crashed in mid-2014.  In the case of the Delaware Basin, using BTU Analytics’ E&P Positioning Report, which uses well-level economic results for all wells drilled since 2013 to calculate a breakeven distribution grid for each play, we estimate that there are 3,267 square miles in the core of the Delaware Basin.  Considering the entire Delaware Basin is 8,465 square miles this means 38% of the basin is considered core.  It also means the core of the Delaware is only slightly larger than the great State of Delaware.  Quaint, isn’t it?  For more information on cores of plays and breakevens request a sample of the BTU Analytics’ E&P Positioning Report.

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Andrew is the CEO at BTU Analytics, LLC and has worked in the energy and technology industries for over 20 years. Prior to BTU Analytics, he was the Senior Commercial Director of North American Natural Gas at Platts-Bentek Energy where he led the natural gas analytics team. Andrew’s past experience includes positions at Amoco Production Company and Constellation Energy. He holds a Masters in Energy and Environmental Analysis from Boston University and a Bachelors in Geology from Colorado College.

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