Permian oil output set to hit new records this year, Plains All American Pipeline says

Published On: February 9, 2024 7:53 pm

Permian Basin Production Surge Anticipated, All Eyes on Plains All American Pipeline

Plains All American Pipeline Forecasts Record-Breaking Oil Production

pipeline,storage tanks and buildings of a refinery - industrial plant for fuel production — industryview/iStock via Getty Images

Step aside, skeptics – the Permian Basin is gearing up for an oil production bonanza this year, catapulting past previous milestones, as Plains All American Pipeline (NASDAQ:PAA) declared on Friday.

With an anticipated surge in drilling efficiency, the Permian Basin is on track to smash through the records on oil production, all the while maintaining a steady rig count, as per Plains All American Pipeline’s Q4 earnings announcement.

The Permian Basin’s oil output is projected to ascend to a staggering 6.4 million barrels per day, a substantial lift from the 6.1 million barrels per day noted at the culmination of 2023. This exponential growth is set to be predominantly driven by endeavors in the Delaware Basin, reaffirmed the company.

In a significant revelation, the company’s CFO Al Swanson articulated, “300 rigs are ‘probably doing the work of close to 330 rigs 12 months ago.'” Furthermore, he highlighted the industry’s concerted efforts toward maximizing the yield from each well, in tandem with the overall availability of volume within the field.

In a strategic move reflecting the momentum in the oil and gas landscape, Plains (PAA) aims to capitalize on burgeoning M&A activities, hinting at potential deals on the horizon. Swanson articulated, “We’re hopeful that we’ll be successful on some bolt-on acquisitions,” underscoring the pivotal role small acquisitions of Permian Basin crude gathering lines have played in augmenting the company’s financial performance.

Despite the market fluctuations, Plains All American (PAA) managed to conclude Friday’s trading with a commendable uptick of 0.3%. The feat comes on the heels of surpassing Q4 adjusted earnings expectations, even as the revenues experienced a marginal 2% year-on-year dip, settling at $12.7 billion. Looking ahead, the company is eyeing a projected FY 2024 adjusted EBITDA attributable to unitholders within the range of $2.625 billion to $2.725 billion, in line with the analyst consensus estimate of $2.68 billion for FY 2023.