Permian Basin crude production and rig count

After being preceded by a decrease in active rig count, Permian crude production appears to be plateauing

The Permian Basin active rig count began to plateau in July 2022 with 350 active rigs. Since that time time, the active rig count has fallen by only 8 rigs (~2%). Crude production from the Permian Basin began to plateau in April 2023. This is an 8 month lag between the 2 events. This relationship has been observed many times in the past and on many scales. It is not just a basin scale relationship, but instead an overall industry relationship. The EIA typically suggest a 6 month lag between rig activity changes and production changes. It reflects the time that is required to drill and complete wells. There is always a time lag. Wells are not completed and brought online immediately. There will always been a “wait” time before production can be initiated due to scheduling.

This is occurring as the Permian Basin it at record production levels approaching 6mbd.