Permian Basin drilling trends upwards, bolstered by rising crude prices
A drilling productivity report recently released by the U.S. Energy Information Administration (EIA) has shown that while oil drilling activity in most regions of the United States covered by the report has seen a precipitous drop since 2015, drilling in the Permian Basin has continued to steadily increase.
The Permian Basin, a geographical region spanning a large portion of western Texas and a corner of southeastern New Mexico, is currently the only region in which the EIA is predicting increased crude oil production for the third consecutive month.
With nearly as many active oil rigs located in the Permian Basin as the rest of the United States combined, deals in this region have accounted for more than half of the total value of all merger and acquisition (M&A) deals in the fourth quarter of 2016.
Spending by exploration and production companies has trended upward since the second quarter of 2016, owing largely to rising crude oil spot prices, which have reached 50 dollars per barrel, up from $30 per barrel in the first quarter.
Improved investor sentiment in the upstream sector has been spurred by better credit conditions, prompting M&A spending in the second half of 2016 to have already exceeded spending in the first half of the year.
