Productivity gains, inventory losses, and a Permian template for Vaca Muerta

Over the last 15 years, the Permian Basin in West Texas has been the hottest unconventional play in the world and operators have consumed 20% of its total inventory. The first 10% of wells showed rapid, year-on-year productivity gains. Performance peaked and the remaining 10% saw a slower rate of productivity growth or even performance losses. This productivity plateau occurs when petrophysics outstrips engineering. The trends evident in the Permian can be used as an analog for Argentina's Vaca Muerta. The parallels between both assets are plentiful: the size of the surface footprint, stacked pay potential, and the oversized importance to domestic output. The Vaca Muerta is in the early days with only 3% of total inventory drilled. If what happened in the Permian is any indication of what will happen, peak productivity is on the horizon. Understanding what happens after that will help stakeholders align expectations and pragmatically manage investment and regulations.