Permian’s Cost Efficiency and Eagle Ford’s Strategic Growth in a Changing Energy Landscape
The U.S. oil and gas industry is evolving rapidly, driven by increased mergers, shifting economic conditions, and changing regulatory landscapes. With the Permian Basin and Eagle Ford remaining central to hydrocarbon production, investors and operators are turning to advanced data analytics to assess asset viability. Rising operating costs, flat to declining rig activity, and policy changes are playing a crucial role in shaping development and production strategies, making well economics a key factor in decision-making.
New tools within TGS Well Data Analytics (WDA) are revolutionizing asset valuation by offering valuable insights into breakeven prices, cash flow projections, and overall asset economics. Leveraging these advanced analytics, the Permian Basin stands out as the most cost-efficient, with an average breakeven price of $51.60 per barrel, significantly lower than Eagle Ford’s $59.80 per barrel (Figure 1 & 2). Despite higher costs, select Eagle Ford counties like Webb and Dimmit present new investment opportunities, particularly as rising LNG demand strengthens the natural gas market. With U.S. crude production expected to reach 13.6 million barrels per day by 2026, according to TGS, and natural gas prices projected to rise, operators are strategically navigating near-term investment options.
Permit and well activity trends further illustrate these shifts. The Permian saw permit development peak at 83% in 2022 before stabilizing at 67% in 2024, with Delaware and Midland sub-basins driving spudding activity. Eagle Ford continues to showcase strong permit efficiency, often exceeding 100% conversion, but recent vintages indicate slowing well development. Production data highlights the dominance of formations like Wolfcamp and Bone Spring in the Delaware Basin and Spraberry in the Midland Basin, though declining drilled but uncompleted (DUC) wells could signal challenges ahead. Meanwhile, the Barnett Shale is emerging as a cost-effective alternative for operators seeking new opportunities.
Looking ahead, the depletion of DUC inventories in the Permian may push operators to ramp up drilling to sustain output, potentially increasing capital expenditures. In contrast, the Eagle Ford is seeing a rise in refracturing techniques to maximize oil recovery in mature wells, reflecting a broader industry trend toward efficiency over aggressive expansion. As market conditions tighten and regulatory landscapes shift, WDA will be instrumental in guiding operators through these transitions, ensuring informed investment strategies and long-term sustainability.
To explore this topic further, check out our recent Well Intel article, Decoding Oil Basin Economics: Leveraging Well Data Analytics for Smarter Investment Decisions Part 1 – Oil Basins Comparison.
For more information about TGS Well Data Analytics or to schedule a demo, contact us at WDPSales@tgs.com.
Figure 1. Permian Basin Breakeven Map at 10% Discount Rate (US$/bbl) by County.
Figure 2. Gulf Coast Basin (Eagle Ford) Breakeven Map at 10% Discount Rate (US$/bbl) by County. For gas counties like Webb, use an economic conversion factor of 18x.
