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Why The Permian Basin Has Become Such A Great Investment

Permian Basin oil is becoming one of the hottest investment options not only for those within the oil industry, but also for investors. While oil prices are falling worldwide, the Permian Basin continues to be profitable thanks to low costs and to wells that are producing plenty of oil. 

Why Oil Prices Are Falling

Oil prices have been plummeting as a result of lower demand, a surplus of oil, and the Organization of the Petroleum Exporting Countries (OPEC) choosing not to restrain output. The surplus of oil has been driven by the U.S. producing oil and pushing out foreign importers. More Americans are fueling up with domestic oil. There are occasionally incidents that lead to a reduction in the production of oil. For instance, there have been forest fires in Canada that have lead to a reduction in the amount of oil produced in the region. However, these setbacks are seen as temporary and are not enough to offset the falling demand in oil. Vehicles are becoming more energy-efficient and are consuming less oil. Many are also purchasing electric cars, which further reduces the demand for fossil fuels.

Oil Is Still Profitable In The Basin

Shares in Permian Basin oil exploration are performing wonderfully in a sector that is otherwise under-performing currently. There are many companies currently dominating the Permian Basin, but the top five are:

  • Chevron.
  • Occidental Petroleum.
  • Apache.
  • Pioneer Natural Resources.
  • Concho Resources.

The Permian Basin has long been a site drilled for oil. However, there has been renewed interest driven by new technologies used to extract oil. The basin is also an excellent land position and the number of sectors where oil is being drilled is regularly growing. As Permian Basin oil exploration continues, it becomes increasingly apparent how rich in oil the region is. The basin actually is made up of three basins:

  • The Marfa Basin
  • The Delaware Basin
  • The Midland Basin

It stretches across Western Texas and Southern New Mexico. It is now often referred to as the most economically profitable basin.

Oil Companies In The Basin Are Attractive Investments

Oil producing companies in the region have taken advantage of the high stock prices by paying down debt. This has made the balance sheets appear more attractive, which has lead to more investors choosing to purchase this investment and driving up the stock price. It is still a great time to buy and see a wonderful return on investment.

For more information, talk to an oil professional like Tarka.