Oil fields in West Texas are teeming with drilling rigs after crude prices shot up to $50 a barrel this year.
But the Energy Department believes a key metric of drilling productivity is about to turn south in the Permian Basin for the first time since its analysts began tracking it in late 2013.
Next month, the daily oil production of a new Permian well drilled by an average rig will decline by 10 barrels to 630 barrels, the Energy Information Administration said in a recent report.
Of course, that doesn’t even amount to a dent in the stunning productivity gains that oil companies have made in the Permian Basin over the past few years, but it’s an ominous milestone for companies that have touted increasingly efficient and productive drilling as a way to offset the financial pain of low oil prices.
It also coincides with another trend: In recent months, oil companies have drilled a lot more wells than they’ve brought into production. The number of so-called drilled-but-uncompleted wells in the Permian Basin is expected to rise to 1,995 in June, up from 1,348 last August, when the EIA first began tracking these unstimulated wells.