Drilling permits for new wells in the Permian Basin surged to record levels in March, according to an analysis published Wednesday from Rystad Energy, signaling crude oil suppliers in the U.S. finally may be responding to higher prices.
A total of 904 horizontal drilling permits were awarded last month in the Permian, Rystad reported, and data since March 7 shows “an unprecedented period of high activity that pushed the four-week average to 210 for the week ending April 3, a record for horizontal permit approvals in the core U.S. shale patch over four weeks.”
Private operators, who normally comprise a third of production, have accounted for more than half of the permits, as publicly traded companies remain limited by their pledges to shareholders to pay down debt and raise dividends.
Top Permian producers include (CVX), (OXY), (PXD), (FANG), (EOG), (XOM), (DVN), (MRO)
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“The surge in permitting activity positions the industry for continuous rig count additions in the second half of 2022 and foreshadows a significant increase in supply capacity from early 2023,” said Artem Abramov, Rystad’s head of shale research.
Data from the Baker Hughes rig count shows momentum in the same direction, soaring by 101 oil rigs (23%) and 43 gas rigs (44%) during the past six months, according to EBW Analytics Group.
Last week’s Baker Hughes rig count showed an additional 16 oil and gas rigs.