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4 Oil Companies Capitalizing on Booming Permian Production

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The Permian Basin stands as a beacon of opportunity in the Oil/Energy sector. Its ongoing production growth, combined with efficiency gains and strategic positioning, offers a compelling investment case. Investors should keep a close eye on Permian-focused companies like EOG Resources (EOG - Free Report) , Diamondback Energy (FANG - Free Report) , ExxonMobil (XOM - Free Report) and Matador Resources (MTDR - Free Report) , as they are well-placed to drive significant value in the coming years.

The Permian Growth Story

The Permian Basin is currently the most exciting place to be for oil and gas investors. As America's leading oil region, the Permian's production growth and potential are unparalleled, making it a prime investment opportunity. The latest forecasts from Goldman Sachs and the Energy Information Administration (EIA) reveal a robust future for this prolific basin.

Goldman Sachs projects that Permian oil production will grow from an exceptional 520,000 barrels per day (bpd) in 2023 to a strong 270,000 bpd by 2026. While geological constraints might curtail growth slightly, the region’s output will remain substantial, contributing significantly to the stability of global oil prices. The EIA added that U.S. crude oil production, led by the Permian, is expected to rise to an average of 13.2 million bpd in 2024 and 13.7 million bpd in 2025. This means nearly half of the nation's oil will come from this region.

The Permian’s impressive performance isn’t just about volume; it's also about efficiency. Recent data indicates that productivity per rig has increased, setting new records. The basin's proximity to refining and export terminals on the Gulf Coast further enhances its attractiveness. With established takeaway capacity and ongoing infrastructure improvements, the Permian Basin is well-positioned for continued growth.

Stocks to Watch

EOG Resources, ExxonMobil, Diamondback Energy and Matador Resources are the key players to watch. These companies, each carrying a Zacks Rank #3 (Hold), have extensive operations in the Permian and are well-equipped to capitalize on its potential.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EOG Resources is a leading player in the Permian Basin, leveraging its extensive acreage in the prime Northern Delaware region. The company excels in cost control and technological innovation, such as Super Zipper fracs, enhancing operational efficiencies. With a strong focus on maximizing returns through strategic investments and partnerships, EOG continues to drive significant growth and value in the region.

ExxonMobil has significantly expanded its operations in the Permian Basin, doubling its production volume since 2019. The company’s investments in the region are a testament to its commitment to boosting output and profitability. To strengthen its presence in the Permian further, ExxonMobil recently paid a staggering $59.5 billion to buy Pioneer Natural Resources.

Midland, TX-headquartered Diamondback Energy is an independent oil and gas exploration & production company with its primary focus on the Permian Basin, where it has more than 490,000 net acres. Its activities are concentrated in the Wolfcamp, Spraberry and Bone Spring formations. By leveraging prime acreage, innovative technologies, and strategic mergers, Diamondback enhances its operational efficiencies and economies of scale.

Matador Resources operates robustly in the Permian Basin, particularly the Delaware Basin, showcasing strong production capabilities. With 150,800 net acres, Matador benefits from the region's vast oil and natural gas reserves, contributing to stable oil prices through record production levels. The company's strategic asset acquisitions and focus on operational efficiency position it well for future growth.

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