The Permian Basin is more than just an oil-rich region; it’s the heartbeat of America’s Energy sector. Producing around 47% of U.S. crude oil and 8% of global supply, this prolific basin shattered records with 6.3 million barrels per day (bpd) in the third quarter. Its steady production growth and operational efficiencies make it a vital component of the global energy market. For investors, it represents a fountain of opportunity in 2025 and beyond.
Major players like ExxonMobil XOM, Diamondback Energy FANG and Chevron CVX have entrenched themselves in the Permian, leveraging its potential to create shareholder value. These energy titans are not just riding the wave but shaping the future of the basin’s oil and gas dominance.
Permian Basin: The Engine Driving U.S. Oil Growth
The Permian Basin remains unrivaled in its contribution to U.S. energy production. Goldman Sachs anticipates an additional 270,000 bpd of growth by 2026, building on the 520,000 bpd added in 2023. Meanwhile, the Energy Information Administration (EIA) forecasts U.S. crude production to hit 13.2 million bpd in 2024 and 13.5 million bpd in 2025, with the Permian leading the charge.
Efficiency is the name of the game. Record-breaking rig productivity and proximity to Gulf Coast refineries and export terminals give the Permian an unmatched strategic advantage. As infrastructure improvements continue, the basin is set to remain the cornerstone of U.S. energy for years to come.
Energy Stocks to Watch: Leaders in the Permian
ExxonMobil, Diamondback Energy and Chevron are some of the key players to watch. These companies have extensive operations in the Permian and are well-equipped to capitalize on its potential.
ExxonMobil's $59.5 billion acquisition of Pioneer Natural Resources significantly extends its Permian Basin reserves, ensuring a production runway of over 15 years at a low supply cost of $35-$40 per barrel. This positions Exxon for robust profitability, even if oil prices dip below the current levels. The deal doubled its production capacity in the region to 1.3 million barrels of oil equivalent per day (MMBOE/d) and exceeded 1.4 MMBOE/d in Q3 2024. The Zacks Rank #3 (Hold) company aims to expand this further to 2 MMBOE/d by 2027, positioning itself for sustained growth in one of the most profitable oil basins globally.
You can see the complete list of today’s Zacks #1 Rank stocks here.
In the Permian, Diamondback Energy focuses on the Wolfcamp, Spraberry and Bone Spring formations. Leveraging innovative technologies and strategic mergers, this independent player delivers efficiency and economies of scale, solidifying its status as a key Permian operator. FANG's acquisition of Endeavor has significantly enhanced its portfolio, adding nearly 1 million acres in the Permian Basin. Completed in Sept. 2024, the deal added substantial reserves in the Permian Basin and increased production capabilities to 850,000 barrels of oil equivalent per day, with crude oil comprising 56%.
Chevron’s operations in the Permian Basin are a testament to its efficiency and scale. The company’s Q3 2024 performance benefited from record production in the Permian Basin, which contributed to a 7% year-over-year increase in worldwide oil-equivalent production. Chevron demonstrates its ability to capitalize on its vast reserves and optimize output. The company plans to invest $4.5 billion to $5 billion in the Permian Basin next year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
