A low case for Lower 48: how does the Permian evolve?

The Permian's growth trajectory continues to change. We previously wrote about the operational challenges reshaping near-term growth potential but the story continues to evolve. Financial considerations are arguably the biggest driver now. They are driving a shift not only in operator behavior, but also in the outlook for Lower 48 production growth. We adjusted rig counts in the Wolfcamp and Bone Spring to see the production effects in West Texas and the Lower 48. A flat rig count results in a largely unchanged 2020 forecast. But 2021 is a different story. Lower 48 growth would fall by 50% to 350 kb/d. Q1 2020 is shaping up to be a critical period. If Permian rigs drop by another 100 units through Q1 2020, then Lower 48 oil production would remain flat through the outlook period.