Industry consensus expects Permian Basin oil supply to flatten and begin rolling over, driven by a significant reduction in active rigs. Based on rig counts alone (shown in the figure below), that’s a compelling argument. Yet our survey of other basin data finds signals that cut against the conventional wisdom.
At East Daley Analytics, our job isn’t always to have the final answer – it’s often to show clients what the data reveals in real time. And right now, several indicators suggest the Delaware sub-basin may continue its growth trajectory through 3Q25, bucking market expectations.
Supply Through Infrastructure
State-reported gas plant data in Texas and New Mexico shows Delaware volumes up 6.1% Q-o-Q (2Q25–3Q25). Growth is concentrated across several key G&P systems:
- XTO/ExxonMobil: +11%
- Energy Transfer (ET) Sendero plant: +10%
- Targa Resources (TRGP): +6%
- Kinetik (KNTK): +6%
- Matador (San Mateo): +3%
These increases imply continued strength in upstream activity, even as rig counts trend lower.
Producer Perspective – Matador Resources (MTDR)
MTDR last Tuesday (Oct. 21) reported 3Q25 oil production of 119.6 Mb/d, down 2.7% Q-o-Q. Historically, MTDR’s reported oil production has shown a strong positive correlation (R=0.69) with the residue gas samples from its own processing plants (1Q23–2Q25), though the two commodities diverged in 3Q. In its earnings release, MTDR reported 4% Q-o-Q growth in gas production to 537.8 MMcf/d.
Because Matador processes most of its gas through its San Mateo asset, growth in gas typically mirrors oil output — often at a faster rate. 3Q25 data had indicated moderate Q-o-Q growth in gas production, which MTDR confirmed in its earnings. Early 4Q25 data (through mid-October) suggests a potential softening ahead for MTDR, though trends remain preliminary.
Producer Perspective – ExxonMobil (XOM)
ExxonMobil has guided to ~7% CAGR in Permian output, though sustaining that rate would be difficult if the forward WTI curve remains in the mid-to-high $50s. However, early signals from the data suggest XOM isn’t rolling over yet.
- Gas volumes to the XTO Cowboy plant are up 11% Q-o-Q (see figure below for the Cowboy plant from the G&P System Analysis dashboard in Energy Data Studio).
- State plant data shows an even sharper 22% increase.
Both metrics point to ongoing growth momentum in the Delaware.
Caveat Emptor
- Preliminary Data: The analysis relies on state-reported gas plant data available on Energy Data Studio, which is incomplete. Midland sub-basin data appear more delayed than usual; we expect updates within the next week.
- Gas vs Oil Growth: Natural gas production typically outpaces crude due to rising gas-to-oil ratios, particularly in the Midland Basin.
Bottom Line: Early data suggests the Delaware Basin hasn’t yet flattened or rolled over — instead, it continues to grow through 3Q25. As earnings season kicks off for upstream and midstream operators, this divergence between rig counts and production trends is likely to be a key topic of debate.
East Daley will continue to monitor these datasets closely and provide updates for clients through Energy Data Studio as additional plant and producer information becomes available. – Rob Wilson, CFA Tickers: ET, KNTK, MTDR, TRGP, XOM.
The Permian Basin at a Crossroads: Download the Latest White Paper
The Permian Basin is the heart of the US energy industry, supplying half of crude oil and NGL production and nearly 20% of natural gas. Yet market pressures are forcing changes, prompting billions in new pipeline investments and reorienting how operators approach the basin. East Daley’s new white paper, The Permian Basin at a Crossroads, is the first of a 3-part series looking at the shifts underway in the Permian. In this series, we reveal how LNG demand and AI data centers could transform Permian gas into a primary revenue driver. We also review the multi-billion-dollar infrastructure needed to unlock this shift, and what’s at stake for oil, gas and midstream operators. — Click here to download the The Permian Basin at a Crossroads white paper!
Meet Daley, the Best AI Tool in Energy
Meet Daley, the newest member of our energy team. Our new AI assistant is live and available to all East Daley Analytics clients. Early feedback has been phenomenal. Daley is platform-specific and only pulls from East Daley’s own proprietary data and content. It’s not open-source or generic AI, but built to understand our structure, language and analytics. Whether you’re looking for a specific metric, forecast or explanation, Daley can get you there quicker. — Reach out to learn more about Daley!
The Daley Note
Subscribe to The Daley Note for energy insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term.