American Oil and Gas Reporter - June 2023 - 58
SpecialReport: Permian Basin Playmakers
to rod pumps. "
Schick points out that the San Andres
wells produce 90%-93% oil and only " a
few hundred Mcf/d of gas, " which is normally
sold to Targa.
" We have to flare what is not sold to
Targa because the gas contains hydrogen
sulfide and carbon dioxide, " he states. " It is
very minor, but over the next five years, we
plan to put in facilities to clean up the gas. "
Schick says PEDEVCO has more than
100 potential drilling locations in the
Chaveroo Field alone.
Storm Clouds
While the Permian continues to enjoy
record-setting production numbers, Kirk
Edwards expresses concern about storm
clouds on the horizon. " There has been a
lot of inflation in drilling and service costs
over the past year, even though supply
chain problems have become less severe, "
says Edwards, who is president and chief
executive officer of Latigo Petroleum LLC
in Odessa.
While oil prices have been hovering
in the $70/bbl range, most Permian wells
also produce associated gas.
" That is especially difficult now because
natural gas prices are near zero
when you factor in compression and
transportation costs, " he adds. " WAHA
hub prices are about 50% of NYMEX
right now. "
Although Edwards lives in Odessa,
Tx., in the heart of the Permian Basin,
Latigo's operations are in the Texas Panhandle.
But he says conditions are the
same for both areas.
" This has caused some small independents
such as myself to pause, " he
states. " We have drilled 14 wells over
the past year, but we have laid one rig
down to see if drilling and service costs
come down. "
Edwards, a past president of the Permian
Basin Petroleum Association, notes
that the number of oil and gas rigs operating
in the fourth week of May had
dropped by 15 to 696 nationwide, the
lowest total since April 2022. With more
than half of those rigs operating in the
Permian, he contends that will mean Permian
production may plateau with another
200,000-300,000 bbl in the future.
" With rigs coming off the market now
for five consecutive weeks, I think we
will see less hectic activity levels and an
impact on oil production, " he adds.
They are plenty of other questions on
the horizon, too, such as a predicted recession,
what the government plans to
do about replenishing the Strategic Petroleum
Reserve, the situation in Ukraine,
and China's comeback in manufacturing,
to name only a few.
" The bigger independents will stay
the course, " Edwards predicts. " They
don't necessarily react to higher or lower
oil prices. They have a different model
than everyone else. The question is what
do the smaller independents do? Do they
continue or will they pause? That is especially
true in the Permian, which is so
investment intensive. "
❒
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58 THE AMERICAN OIL & GAS REPORTER
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American Oil and Gas Reporter - June 2023
Table of Contents for the Digital Edition of American Oil and Gas Reporter - June 2023
Contents
American Oil and Gas Reporter - June 2023 - Intro
American Oil and Gas Reporter - June 2023 - Cover1
American Oil and Gas Reporter - June 2023 - Cover2
American Oil and Gas Reporter - June 2023 - Contents
American Oil and Gas Reporter - June 2023 - 4
American Oil and Gas Reporter - June 2023 - 5
American Oil and Gas Reporter - June 2023 - 6
American Oil and Gas Reporter - June 2023 - 7
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American Oil and Gas Reporter - June 2023 - Cover3
American Oil and Gas Reporter - June 2023 - Cover4
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