Has Midland and Delaware Basin Oil production peaked?

A large increase in drilling and production costs in the USA Shale Oil sector will likely slow the growth of production from the Permian Basins.

To just maintain production hundreds of new wells must be drilled each year due largely to the rapid decline in tight wells. In the Permian Basins in the last 15 years consolidation has been aggressive and while the largest producers, Chevron, Devon and ConocoPhillps have a sizeable drilling inventory smaller companies have exhausted their drilling locations.

Combine increasing costs and decreasing inventory with the negative mood of the Biden administration and the EPA and it is now unlikely that there can be significant growth within the Delaware and Midland sub-basins within the Permian.

High oil prices of recent times have resulted in increased cashflow which have been secured by activist investors to fund dividends and share buybacks rather than aggressive investment in new field development.

Maybe its time to look elsewhere for tight oil and gas plays where the potenital is yet to be realized however capital and operating costs outside of the USA are markedly higher and only very productive tight production will be economically feasible elsewhere.

Top Depth (ft) WolfCamp A Formation within the Permian Basin. The Midland Basin (White) and Delaware Basin (Yellow) outlines. Red outline is the 6,000 ft contour to top of WolfCamp A covers 41,000 km2.

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