After years of steady gains, the Permian Basin is entering a more tempered growth phase as producers recalibrate spending plans. Several intend to pull back on drilling activity and have revised guidance lower after the recent drop in oil prices to $60/bbl.
Diamondback (FANG) set the tone for 1Q25 earnings updates, trimming its 2025 capital budget by $400MM and unveiling plans to drop 3 rigs and a frac crew from the Permian in 2Q25. Management made it clear: growth is viable at $60/bbl WTI, but anything below that price level puts the basin in maintenance mode — with potential for activity to stall around $50 WTI.
Coterra Energy (CTRA) followed suit, dropping its Permian guidance from 10 to 7 rigs and lowering capex to $2.0–2.3B. The producer has left the door open for deeper cuts if prices weaken further. Devon Energy (DVN) surprised to the upside, beating oil guidance thanks to strong Delaware performance. Still, DVN shaved $100MM off its capital plan and doubled down on a $1B optimization strategy to boost free cash flow without sacrificing output.
EOG Resources (EOG) reported $1.3B in free cash flow and production above forecasts, but also reduced capex guidance by $200MM. Even Matador Resources (MTDR) is tapping the brakes. The Delaware-focused producer plans to drop 1 rig mid-year, citing a need for discipline even as its capital guidance holds steady for now.
Taken together, the updates tell a cohesive story: the Permian is no longer on a breakneck growth trajectory. Instead, producers are embracing capital discipline in a $60/bbl price environment with more downside risk.
Moderating activity will inevitably ripple through the G&P landscape. Systems that have seen consistent volume growth may now face slower ramps or even volume declines. Infrastructure developers and midstream operators will need to reassess assumptions tied to basin-level growth and reoptimize for a flatter profile in 2025.
This is where East Daley Analytics’ Producer to System dashboard becomes a powerful tool. The database in Energy Data Studio helps bridge the gap between upstream activity and midstream exposure by showing how changes to production guidance directly connect to individual G&P systems.
Diamondback, for example, did not specify where it intends to cut rigs, but the Producer to System dashboard for FANG (pictured above) shows its core operations are in the Midland Basin, particularly in Martin, Midland and Howard counties. These areas are likely to feel the brunt of the cutbacks. FANG delivers gas to G&P systems in the area owned by Enterprise (EPD), ONEOK (OKE) and Energy Transfer (ET), according to the dashboard, so these assets could be vulnerable to a slowdown in volumes.
Reach out to East Daley to learn more about the Producer to System dashboard. – Maria Paz Urdaneta Tickers: CTRA, DVN, EOG, EPD, ET, FANG, MTDR, OKE.
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