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August 2017 SEE Monthly Update

Permian Cools Slightly

         The US Permian Basin in West Texas and New Mexico produces 2.3 million barrels per day of oil, more than a fifth of the country’s total.

         Companies there also produce 800,000 barrels per day of natural gas liquids and 6.5 billion cubic feet per day (BCF/D) of natural gas, most of associated with oil. This production is expected to increase. RBN Energy notes that the Permian Basin has 103 operational natural gas processing plants with 11.3 BCF/D of capacity; however, the recent 40% increase in gas volumes has meant new constraints moving natural gas in and out of West Texas’ Waha pipeline hub.

         While global oil dynamics are ever-evolving, with Libya and Nigeria excused from quotas, Iraq targeting much-increased production, and Saudi Arabia concerned about increasing its production without tanking prices, oil’s volatility will continue. The dynamics have become even more complex as US shale producers are now, too, a market supply force with which OPEC and non-OPEC producers (like Russia) must reckon.

         The appeal of the Permian will continue due to its stacked pay. Sources for Oil and Gas Investor show all companies targeting multiple zones, with the 3rd Bone Spring, Wolfcamp A, and Wolfcamp B zones the most popular, but with companies also targeting the Wolfcamp C and Wolfcamp D zones, the 1st and 2nd Bone Spring zones, the Avalon Shale, and the Brushy Canyon zone.

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           Copyright 2017, Starks Energy Economics, LLC. This information may not be disclosed, copied or disseminated, in whole or in part, without the prior written permission of Starks Energy Economics, LLC. This communication is based on information which Starks Energy Economics, LLC believes is reliable. However, Starks Energy Economics, LLC does not represent or warrant its accuracy. This communication should not be considered as an offer or solicitation to buy or sell any securities.

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