Is the Scorching Permian Basin About to Cool Off?
While most of the oil industry spent the past two years trying to get back up on its feet after getting bowled over by the oil market downturn, there have been a few notable exceptions. One such place is the Permian Basin in west Texas and southeast New Mexico, which has become a hot spot for drillers that found that its hydrocarbon-rich rocks can fuel jaw-dropping drilling returns at current oil prices. Because of that profit potential, oil companies have spent billions of dollars locking up drillable land in the region.
However, that land grab appears to be waning. Not only had land values started getting out of hand but drillers have already bought enough inventory to last them a decade. Meanwhile, investors seem to be less impressed with growth potential and more focused on seeing a return. Because of that, it appears like drillers are undergoing a strategic shift from resource accumulation to creating value from their previously acquired positions.
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Source: Fool.com