Insight
Permian associated gas: a surprise cash generator?
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 9 images and tables including:
- May 2020 short-term gas price outlook
- Average productivity of the top ten most active Permian sub-plays and associated oil cut
- Delaware Wolfcamp A Cum365 gas-to-oil ratio (GOR) map (scf/bbl)
- Average well-level GOR trends for Western Delaware Basin sub-plays
- 2021 revenue by commodity under varying gas prices from PDP production
- 2021 revenue by commodity under varying oil prices from PDP production
- Eastern and western Delaware Basin type curves for New Mexico sub-plays
- Single well NPV20 under varying gas prices and flat US$40/bbl WTI
- Single well NPV20 under varying gas prices and flat US$50/bbl WTI
What's included
This report contains:
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