Idle Note On The Permian -- July 22, 2014

I've been blogging about the Bakken since 2007. I deleted all postings between 2007 and 2009, and started over, so this site only goes back to 2009. I am inappropriately bullish on the Bakken. Having said that, the Permian might be the next big story. I started noting that about a year ago, maybe earlier. The USGS estimates of the three major shale plays (the Bakken, the Eagle Ford, and the Permian) are not helpful.  I track the Permian elsewhere, but don't always link every post. But today we have yet another story coming out of the Permian. This is a press release from a company obviously looking for investors, so beware, but take it for what it's worth:

Crude Energy’s operations in the Permian Basin are part of the reason the region is making such a dramatic comeback. The Permian basin is now the most prolific oil producing region in the United States, with producers such as Devon Energy, Pioneer Natural Resources and Chevron leading the pack. That comes from the U.S. Energy Information Administration, which took an in depth look at the impressive revival in oil and gas production in West Texas.

The Permian Basin has been producing oil and gas for around a century, but it went into a period of decline in the latter half of the 20th century. Over the last five years, however, oil and gas production in formations like the Sprayberry, Wolfcamp, Bone Spring, Glorieta and Yeso, and Delaware has surged. [I've mentioned the Bone Spring formation before.]

The numbers reflect this success. In 2007, the Permian basin only produced 850,000 barrels per day, which is not a trivial amount. But by 2013, oil production jumped to 1.35 million barrels per day. That is enough to put the Permian Basin in the top spot in terms of oil production across the country. Last year, the Permian accounted for 18% of total U.S. oil production.

Early flow rates in the Permian are comparable to the Eagle Ford in South Texas, and the Bakken in North Dakota –two regions that tend to get a lot more press coverage.

And the word is out on the Permian, which accounted for 50% of the additional rigs that entered into operation in the first quarter of 2014.

But it is not as if all of the formations within the Permian are proving to be so productive. The top three – the Sprayberry, the Wolfcamp, and the Bone Spring formations – alone account for almost three-quarters of the growth in the Permian Basin over the last several years.

And it is in the Wolfcamp that Crude Energy is making moves.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here. I had not heard of Crude Energy until I saw this story. I have no plans to invest in Crude Energy. The story is posted to keep me abreast of the Permian.