The Permian Pursuit

Can the Permian Basin–the most prolific basin in the U.S.—turn on a dime, or $100 oil?

(Source: Hart Energy / Oil and Gas Investor)

[Editor's note: A version of this story appears in the April 2022 issue of Oil and Gas Investor magazine.]

Despite a lingering sentiment of shareholder uncertainty and the steady momentum behind alternative energy to curb fossil fuels, Permian Basin oil and gas operators are poised this year for massive profits, abundant free cash flow and, perhaps, some degree of public grace.

Global demand for oil has rebounded to 95% of pre-COVID levels, according to a year-end 2021 Deloitte report. The burst is boosting both commodity prices and corporate optimism. Russian aggression and the potential for supply ramifications create a volatile unknown. Still, February prices on global benchmark Brent oil popped, breaching $100/bbl and commanding rates at 10-year highs.

The exuberance is bringing some producers’ share prices along for the ride, too. On Feb. 22, shares in Pioneer Natural Resources Co. traded at $240.97 each, a record high in the company’s 25-year history. Devon Energy Corp. shares’ worth grew 177% and closed out 2021 as the best performing stock on the S&P 500 Index.

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