Following 4Q24 earnings, East Daley Analytics surveyed producers in the Permian Basin for the latest supply guidance. Operators indicate crude oil production will grow 306 Mb/d (+4.8%) on average from 2024 to ’25. The results trail our forecast for +363 Mb/d of Permian supply growth in 2025, though we suspect some companies are lowballing initial guidance.
EDA’s survey of Permian operators is shown in the table. ExxonMobil (XOM), Matador (MTDR), Devon Energy (DVN), Permian Resources (PR) and Chevron (CVX) are the operators driving growth, projecting supply gains of 7-20% between them in 2025. Others, such as Diamondback Energy (FANG) and Civitas (CIVI), plan to maintain flat production.
The latest producer guidance currently exceeds OPEC’s supply expectations, aligns with the EIA’s outlook, and is below EDA’s forecast for +363 Mb/d (+5.7%) of crude oil production growth, as shown in the figure. The forecast from the Permian Production Scenario Tool in Energy Data Studio is based on 281 active rigs and initial production (IP) rates per well of 925 b/d in the Midland and 1,000 b/d in the Delaware sub-basins. We also incorporate factors such as decline rates, drilling schedules and well completions into our supply outlooks.
A key variable in the Permian forecast is the role of private operators, who historically have expanded output at a faster rate than public E&Ps. However, industry consolidation has shifted the balance, and public companies now operate over 75% of active rigs in the Permian following a wave of acquisitions targeting private operators. Given these historical trends, EDA expects private producers will grow at a more rapid rate, suggesting additional upside to the production forecast.
Public producers also have a track record of setting a low bar and exceeding initial production guidance later in the year. As a result, actual production growth in the Permian Basin could surpass current forecasts in Energy Data Studio, depending on execution and operational efficiencies.
To learn more about the outlook for crude oil markets, East Daley is hosting a webinar on Wednesday, March 12 at 10 AM MST for a comprehensive forecast. Register here to join us. – Rob Wilson, CFA and Gage Dwan Tickers: CIVI, CVX, DVN, FANG, MTDR, PR, XOM.
Join East Daley March 12th to Review the Crude Oil Outlook
Join East Daley Analytics on March 12th at 10 AM MST for an in-depth exploration of the evolving North American crude oil landscape. In this webinar, our experts will provide a comprehensive macro crude forecast, focusing on the increasing production in the Western Canadian Sedimentary Basin (WCSB), Rockies and the Permian Basin and its impact on US markets. Register here.
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