With today’s market commentary on Permian efficiencies we’re trying something new. We’ll let these charts do most of the talking.
Average IP rates in the Permian continue to rise significantly.
However, declines in D&C costs can’t last forever, and productivity gains cannot continue at this pace indefinitely. Historical operating margins of the big service companies give an indication of the magnitude of cost inflation we might expect to see, since these margins behave cyclically, and can’t stay as low as they are for much longer. Bonus – a fourth chart.
Will continued improvements in efficiencies be enough to offset rising costs? Will constraints and basis blowouts provide opportunities for other basins to compete? For these answers and more, request information on our E&P Positioning Report service, which will feature a spotlight on Permian dynamics later this month. And for monthly updates on new infrastructure announcements versus Permian production, request a sample of our Oil Market Outlook.