The Permian Basin includes most of West Texas and southeastern New Mexico, covering an area of approximately 86,000 square miles. One of the largest structural basins in North America, the Permian is an intensely explored, mature basin having a variety of stratigraphic trap types, multiple stacked reservoirs, relatively low-cost drilling and access to transportation and markets.
Other attractive characteristics include long-life reserves, large, legacy oil fields, excellent product infrastructure, waterflood and enhanced-oil-recovery applications, and other exploitation opportunities.
Production, reserves. The Permian Basin has been one of the most prolific petroleum regions in North America, producing oil primarily from Permian- and Pennsylvanian-age carbonate reservoirs.
The region is characterized by two distinctly different types of production: long-life oil in shallow formations in the Central Basin Platform, typically legacy assets of the U.S. majors that are under secondary or tertiary recovery; and deeper gas wells in the Delaware and Midland basins, which can be characterized as low risk with long-life reserves.
Current basin production is approximately 10.4 billion cubic feet equivalent per day, ranked second in the U.S., from 118,000 active wells. It is approximately 52% oil.
Major fields. In the Permian Basin, production in the top 10 fields is dominated by the Grayburg-San Andres and the Spraberry formations.
The Grayburg-San Andres is the single-most prolific producer in the Permian Basin, with cumulative production of 13 billion barrels of oil from more than 500 designated fields. It accounts for approximately 45% of all the oil produced in the basin. Many fields are developed on asymmetrical, northwest-trending anticlines parallel to the eastern margin of the platform and have a significant stratigraphic component (loss of porosity, facies changes).
The Spraberry trend is a large stratigraphic trap 75 miles long and up to 30 miles wide. It is productive from low- permeability siltstone and sandstone, deposited in basin-floor submarine fan systems in the Midland Basin.
Operations, technology, costs. Land in Texas can be either private or state owned, and is generally accessible for leasing. However, as a significant portion of New Mexico land is under federal control by the Bureau of Land Management, the permitting process can be lengthy there. The majority of wells drilled are conventional, relatively shallow vertical wells that become long-life, low-volume producers.
Recently, horizontal drilling has emerged as a successful method to complete fractured carbonates in shallow fields. A large percentage of production comes from secondary and tertiary projects such as waterflood or CO2, with a CO2 source nearby in the Bravo Dome in New Mexico.
Operating costs tend to be high in the Permian due to secondary- and tertiary-recovery operations. Wellhead-price differentials in the Permian Basin are generally quite low, but the distance from the market results in slightly higher differentials than in the Gulf Coast or Ark-La-Tex regions.
Transaction activity. In an otherwise slow year, the Permian Basin has garnered the most interest for M&A activity in the U.S. Reasons for this include its long-life, low-cost predictable production streams and large oil reserves remaining in place.
—Bobby Stillwell
(713) 437-5044, Scotia Waterous
Recommended Reading
Ring May Drill—or Sell—Barnett, Devonian Assets in Eastern Permian
2025-03-07 - Ring Energy could look to drill—or sell—Barnett and Devonian horizontal locations on the eastern side of the Permian’s Central Basin Platform. Major E&Ps are testing and tinkering on Barnett well designs nearby.
E&Ps Pivot from the Pricey Permian
2025-02-01 - SM Energy, Ovintiv and Devon Energy were rumored to be hunting for Permian M&A—but they ultimately inked deals in cheaper basins. Experts say it’s a trend to watch as producers shrug off high Permian prices for runway in the Williston, Eagle Ford, the Uinta and the Montney.
Hibernia IV Joins Dawson Dean Wildcatting Alongside EOG, SM, Birch
2025-01-30 - Hibernia IV is among a handful of wildcatters—including EOG Resources, SM Energy and Birch Resources—exploring the Dean sandstone near the Dawson-Martin county line, state records show.
Oxy CEO: US Oil Production Likely to Peak Within Five Years
2025-03-11 - U.S. oil production will likely peak within the next five years or so, Oxy’s CEO Vicki Hollub said. But secondary and tertiary recovery methods, such as CO2 floods, could sustain U.S. output.
Shale Outlook: E&Ps Making More U-Turn Laterals, Problem-Free
2025-01-09 - Of the more than 70 horseshoe wells drilled to date, half came in the first nine months of 2024 as operators found 2-mile, single-section laterals more economic than a pair of 1-mile straight holes.
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