Permian Basin wells break-even as low as $22 per barrel

GlobalData says this is partly enabled by companies drilling much longer sideways wells

Big Zero Report 2022

The best-performing oil wells in the Permian Basin are breaking-even at as low as $22 (£16.6) per barrel.

That’s according to analytics firm GlobalData, which says during the last three years, companies operating in the region have drilled much longer sideways wells underground, known as laterals.

It adds firms are also using substantially more complex designs in their newer wells with the aim of reaching higher initial production rates.

Average well lateral lengths have increased by more than 1,500 feet since 2016 to approximately 7,500 feet by the end of 2017.

An analysis of recent wells for 26 operators in the Permian Basin indicates a break-even oil price ranging from $21 (£15.8) to $48 (£36.2) per barrel.

Operators EOG Resources, XTO Energy, Pioneer Natural Resources, Concho Resources and Chevron are the companies with the lowest oil break-even prices – they also have relatively long lateral lengths, varying from 7,560 feet to 10,500 feet.

The estimated ultimate recovery for such wells exceeds a billion barrels of oil equivalent.

Svetlana Doh, Oil and Gas Analyst at GlobalData, says: “All 26 operators included in this analysis have new wells that break-even below a price of $50 (£37.7) per barrel.

“Nonetheless, some operators evidence the possibility of reaching even higher well returns with break-even values below $25 (£18.8) per barrel.”

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