Permian Basin Oil and Gas Exploration over the Next Five Years

Oil and gas companies in the Permian Basin in Western Texas and Southeastern New Mexico face many of the same industry trends that those throughout the U.S. will face over the next five years. The trends, which promote optimism and caution continued vigilance, will affect technology, credit and capital availability, global conditions and energy demand, and the regulatory landscape.

Melvin F. “Trey” Hunt III, partner-in-charge of oil and gas services at Weaver, identifies the trends that each area can anticipate in an article posted on MyWestTexas.com.

• Capital and credit. Cost and availability of capital and credit could be enhanced as a result of steps taken by the Federal Reserve to kick-start economic growth. Interest rates are likely to remain low for an extended period of time, with credit readily available for capital expenditures
• Technology. Horizontal drilling and hydraulic fracturing, a technology first developed for natural gas extraction, have been adopted by oil companies and could help extend the productive lifespans of mature oil-producing regions.
• Regulatory landscape. This area could make for unfavorable conditions, due to differing oil and gas industry views between the country’s two major political parties. The parties have debated, among other things, the continuation of the intangible drilling costs (IDC) deduction. 
• Global conditions and energy demand. The measured and efficient exploitation of natural resources globally is largely dependent on political stability in key oil-producing nations – particularly, Saudi Arabia, Nigeria and Venezuela. If there is political unrest in those key nations, market conditions in the Permian Basin and throughout the U.S. will be affected.