Insight
Permian associated gas: a surprise cash generator?
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
Slowing associated gas growth is helping improve local Permian prices. After years of West Texas gas prices barely breaching a dollar, they could average over US$2.20/mcf next year. How does this shift impact the economics of Permian tight oil? More than one might imagine, considering some Delaware Basin wells produce less than 30% oil, all the while getting gassier too. Is there also a point where high GOR wells have better returns? This might have been unthinkable six months ago. So should we expect a rush of rigs into gassier Permian acreage? Monetizing a gas stream has not been historically easy for many Permian E&Ps. Who stands to benefit and what has to be done to capitalize on this opportunity?
Table of contents
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Executive summary
- Less associated gas is pushing Henry Hub higher
- Is the Delaware Basin a gas play in disguise?
- Combining more gas and better markets
- But what about undrilled locations?
- What if oil prices increase too?
- Will activity increase in gassier areas of the Permian?
Tables and charts
This report includes the following images and tables:
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May 2020 short-term gas price outlookAverage productivity of the top ten most active Permian sub-plays and associated oil cutDelaware Wolfcamp A Cum365 gas-to-oil ratio (GOR) map (scf/bbl)
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Average well-level GOR trends for Western Delaware Basin sub-plays2021 revenue by commodity under varying gas prices from PDP production2021 revenue by commodity under varying oil prices from PDP productionEastern and western Delaware Basin type curves for New Mexico sub-playsSingle well NPV20 under varying gas prices and flat US$40/bbl WTISingle well NPV20 under varying gas prices and flat US$50/bbl WTI
What's included
This report contains:
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