With the price of oil in the mid-$40 range this week and plummeting to a low of sub-$27 earlier this year, energy companies are tightening the purse strings on new exploration and extraction.
They’re focusing the most attention on the high-producing and low-cost rigs of the Permian Basin — where rock formations tend to be thinner and require less drilling and upkeep.
In looking at the latest rotary rig count data by Houston-based oilfield services company Baker Hughes, the Permian Basin had 142 rigs, by far the state and nation’s most-active basin. (There are 178 active rigs in Texas and 408 in the United States, according to the data.)
It’s no coincidence, then, that the average break-even cost per barrel of oil in Bone Spring, Spraberry and Wolfcamp formations — all in the Permian Basin — are lower than those of the nearby Eagle Ford.
When looking at average break-even numbers, it’s important to note that there will be rigs with higher and lower breakeven points and that even one highly efficient or inefficient well can easily skew the numbers.
Still, take a look at the latest map of active oil and gas wells by the U.S. Energy Information Administration that we could find. The largest cluster? You guessed it: The Permian Basin.