Eric Peterson, ARB's Director of Market Research and Analysis, addresses the growing outlook of production in the Permian basin and assesses it's effects on the takeaway infrastructure.
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• WTI forecasted to hit $56-$57 range by YE 2017
• Total rig count has increased nearly 75% from May 2016 lows
• North American production to add an incremental 1.2MM in next 2 yrs
• Acreage prices and deal volume have reached record levels in 2016
• Drilling and completion enhancements boosting IP rates, EUR’s and proppant usage
• Expansions of pipeline takeaway capacity will not be sufficient, 300kbpd of new build infrastructure needed by Q1 2019
• Timing of capacity expansions is crucial, could see price differentials blowout if production outpaces demand build out