Drilling activity in the permian basin has reached a threshold that allows the resumption of…

NORMALIZED WELL PRODUCTIVITY FELL SLIGHTLY, WHILE Q2 PERMIT ACTIVITY IS UP. This article contains still images from the interactive dashboards available in the original blog post. To follow

the instructions in this article, please use the interactive dashboards. Furthermore, they allow you to uncover other insights as well. VISIT SHALEPROFILE BLOG TO EXPLORE THE FULL

INTERACTIVE DASHBOARD This interactive presentation contains the latest oil & gas production data from all 31,497 horizontal wells in the Permian (Texas & New Mexico) that started

producing from 2008/2009 onward, through May 2021. Total Production Tight oil production in the Permian was flat at 4.0 million bo/d in May for the 2nd consecutive month (after revisions,

horizontal wells only). Natural gas production most likely set a fresh record at over 16 Bcf/d in May (toggle product to ‘gas’). Supply Projection As of last week, 235 rigs were drilling

horizontal wells in the Permian (according to Baker Hughes). Our Supply Projection dashboard shows what would happen if drilling activity would stay at this level (the interactive version

allows you to set your own assumptions): HORIZONTAL RIG COUNT AND TIGHT OIL OUTLOOK IN THE PERMIAN, BASED ON CURRENT DRILLING ACTIVITY & WELL PRODUCTIVITY The bottom chart shows that,

_all else being equal_, output in the basin could slowly start growing again at this level, but that it would still take a while before the previous record would be topped. Well productivity

In the 3rd tab of the presentation above (“Well quality”), you can analyze how well productivity has improved in the Permian Basin in the last few years, on average. After normalizing

production data for the increase in lateral length, we find that well performance has slightly deteriorated since 2016: AVERAGE OIL PRODUCTION RATE VS. CUMULATIVE OIL PRODUCTION, NORMALIZED

BY LATERAL LENGTH. RESULTS ARE GROUPED BY YEAR OF FIRST PRODUCTION (2016–2020). During these years, lateral lengths increased from 7 thousand feet (2016) to 9 thousand feet (2020), on

average. Well permits Permitting activity was higher in Q2 this year than in the preceding 4 quarters, as our Permit activity dashboard reveals: NUMBER OF APPROVED PERMITS FOR HORIZONTAL

WELLS, BY QUARTER, SINCE 2020 THROUGH AUGUST 18TH In Q2 this year 1,742 permits for horizontal wells were approved, versus 1,187 in Q2 last year (~50% increase). Top operators In the final

tab (“Top operators”) the production and well positions are displayed for the 10 largest producers in the Permian. Pioneer Natural Resources has solidified its lead after its recent

acquisition spree, with half a million b/d of operated production capacity in May. Finally We will have a new post on the Eagle Ford early next week, followed by a post on Pennsylvania

(which just released complete June production data, already available in our services). Production and completion data are subject to revisions. Note that a significant portion of production

in the Permian comes from vertical wells and/or wells that started production before 2008, which are excluded from these presentations. Sources For these presentations, I used data gathered

from the following sources: * Texas RRC. Oil production is estimated for individual wells, based on a number of sources, such as lease & pending production data, well completion &

inactivity reports, regular well tests, and oil production data. * OCD in New Mexico. Individual well production data is provided. * FracFocus.org VISIT OUR BLOG TO READ THE FULL POST AND

USE THE INTERACTIVE DASHBOARDS TO GAIN MORE INSIGHT: HTTPS://BIT.LY/3SVHBHS Follow us on Social Media: Twitter: @ShaleProfile LinkedIn: ShaleProfile Facebook: ShaleProfile