Weakening oil prices may induce Permian Basin operators to cut spending next year and hold production steady at 6.4 MMbbl/d, Enverus Intelligence Research said in a new research report.

That level of production suggests a 10% drop in the rig count, EIR said, as operators get more oil per rig thanks to longer laterals and better well performance. WTI futures have been trading at about $70 a barrel on Nymex, down from more than $85 in April.

A spending shift would also slow the growth in the Permian’s natural gas output, creating opportunities in other regions.

It would be “bullish for the Gulf Coast natural gas plays,” said Alex Ljubojevic, director at EIR. “Lower Permian natural gas growth would need to be offset by increased production out of the Haynesville and Eagle Ford dry-gas regions.”

Comments