Permian Basin Mineral Management
The Permian Basin stands as the most prolific oil and gas producing region in the United States, accounting for approximately 40% of total domestic oil production. Spanning West Texas and southeastern New Mexico, this geological powerhouse has experienced a dramatic resurgence over the past decade due to advances in horizontal drilling and hydraulic fracturing technology. For mineral owners with interests in this dynamic basin, professional management is essential to maximize value and ensure regulatory compliance across multiple jurisdictions.
The Permian Basin produces over 5 million barrels of oil per day, making it the largest oil producing basin in North America. The basin's unique geology features multiple stacked pay zones, allowing operators to target several productive formations from a single location. Key counties in Texas include Midland, Ector, Martin, Howard, Reeves, Loving, Ward, and Winkler, while New Mexico production centers on Lea and Eddy counties. This multi-state footprint creates complex regulatory requirements that Valor navigates on behalf of mineral owners.
The Permian Basin comprises two major sub-basins separated by the Central Basin Platform: the Midland Basin to the east and the Delaware Basin to the west. Understanding the differences between these regions is crucial for mineral owners evaluating their assets.
The Midland Basin, centered around Midland and Martin counties, has been the historical heart of Permian production. This sub-basin primarily targets the Spraberry and Wolfcamp formations, with decades of development creating extensive infrastructure networks. The Midland Basin's longer development history means more established decline curves and production data, providing mineral owners with greater predictability in royalty forecasting. Valor maintains a local office in Midland to serve mineral owners throughout this region.
The Delaware Basin, stretching from Reeves and Loving counties in Texas into Lea and Eddy counties in New Mexico, has emerged as the most active drilling region in the Permian. This sub-basin features thicker productive intervals in the Bone Spring and Wolfcamp formations, often delivering higher initial production rates. However, the Delaware Basin's more remote location has created infrastructure challenges, including takeaway capacity constraints and water management issues that operators continue to address.
The Permian Basin's stacked pay concept allows operators to develop multiple formations vertically, maximizing the value of mineral interests. Understanding these formations helps mineral owners evaluate development proposals and assess future drilling potential.
The Wolfcamp spans the entire Permian Basin and is divided into multiple benches (A, B, C, D). This formation represents the primary target for most horizontal drilling programs and contains billions of barrels of recoverable oil.
Located primarily in the Delaware Basin, the Bone Spring contains three main intervals that operators target with horizontal wells. This formation has become increasingly important as drilling technology improves.
The Spraberry is the primary target in the Midland Basin, with a long production history dating back to conventional vertical drilling. Horizontal development has unlocked significant additional reserves from this formation.
The Cline, also known as the Lower Wolfcamp, represents an emerging target formation with substantial resource potential. Development of this zone continues to expand as operators refine completion techniques.
The Permian Basin's multi-state footprint creates unique regulatory challenges for mineral owners. Operations in Texas fall under the jurisdiction of the Railroad Commission of Texas (RRC), while New Mexico activities are regulated by the Oil Conservation Division (OCD). Valor helps mineral owners navigate these different regulatory frameworks.
The rapid growth of Permian Basin production has created significant infrastructure challenges that directly impact mineral owner economics. Understanding these factors is essential for evaluating lease terms and production forecasts.
Pipeline capacity constraints have historically affected Permian Basin pricing, with basis differentials widening during periods of limited takeaway. New pipeline projects have alleviated some constraints, but mineral owners should understand how their operators manage transportation arrangements and price realization.
Hydraulic fracturing requires significant water volumes, while produced water disposal represents a major operational cost. The development of water recycling infrastructure and produced water pipelines affects operator economics and, consequently, the pace of development on mineral interests.
Associated gas production from Permian oil wells requires processing infrastructure to capture valuable natural gas liquids. Plant capacity and gas gathering systems influence development timing and mineral owner revenue streams.
Comprehensive tracking and verification of royalty payments from Permian Basin operators across both Texas and New Mexico.
Expert review of Permian Basin oil and gas leases, including depth severance and horizontal Pugh clause provisions.
Monitoring RRC and OCD compliance across multi-state mineral portfolios with different regulatory requirements.
Verifying decimal interest calculations in complex horizontal wellbore configurations and pooled units.
Tracking drilling permits, completion activities, and development plans across your Permian Basin mineral interests.
Assisting with production and revenue audits to ensure accurate accounting and proper deductions.
The Permian Basin attracts investment from the largest independent and integrated oil companies in the world. Major operators active in the basin include Pioneer Natural Resources (now part of ExxonMobil), Diamondback Energy, ConocoPhillips, Occidental Petroleum, Chevron, Apache Corporation, Devon Energy, and EOG Resources. Understanding operator strategies and financial strength helps mineral owners evaluate development timing and production potential.
How does the Permian Basin compare to other major producing basins in the United States?
| Basin | Location | Primary Product | Key Formations | Daily Production |
|---|---|---|---|---|
| Permian Basin | West Texas, SE New Mexico | Oil | Wolfcamp, Bone Spring, Spraberry | ~5.5 million bbl/day |
| Eagle Ford | South Texas | Oil & Condensate | Eagle Ford Shale | ~1.2 million bbl/day |
| Bakken | North Dakota, Montana | Light Oil | Bakken, Three Forks | ~1.1 million bbl/day |
| Marcellus Shale | PA, WV, OH | Natural Gas | Marcellus, Utica | ~35 Bcf/day gas |
| Haynesville | NW Louisiana, E Texas | Natural Gas | Haynesville Shale | ~14 Bcf/day gas |
| DJ Basin | Colorado, Wyoming | Oil & Gas | Niobrara, Codell | ~500,000 bbl/day |
| SCOOP/STACK | Central Oklahoma | Oil & NGLs | Woodford, Meramec | ~600,000 bbl/day |
Note: Production figures are approximate and based on most recent available data.
The Permian Basin is the largest oil producing basin in the US due to its stacked pay zones, with multiple productive formations including the Wolfcamp, Bone Spring, Spraberry, and Cline. Horizontal drilling and hydraulic fracturing have unlocked vast reserves from these tight formations, allowing operators to drill multiple wells from a single pad targeting different zones. The basin produces over 5 million barrels of oil per day, accounting for roughly 40% of total US oil production.
The Midland Basin and Delaware Basin are the two main sub-basins of the Permian Basin, separated by the Central Basin Platform. The Midland Basin in the east primarily targets the Spraberry and Wolfcamp formations, while the Delaware Basin in the west focuses on the Bone Spring and Wolfcamp. The Delaware Basin generally has thicker productive intervals and higher initial production rates, while the Midland Basin has been developed longer and has more established infrastructure.
The Permian Basin spans two states with different regulatory agencies. In Texas, the Railroad Commission of Texas (RRC) oversees oil and gas operations, well permitting, and production reporting. In New Mexico, the Oil Conservation Division (OCD) under the Energy, Minerals and Natural Resources Department regulates drilling and production activities. Mineral owners with interests in both states must navigate different regulatory requirements, reporting timelines, and compliance standards.
