This is one of three major benefits the company brings to the table:
As I just briefly explained, the company has a high-margin business model, as it does not incur drilling costs.
The Permian is home to almost half of all onshore horizontal rigs in the United States. Essentially, it's the place to be for oil and gas production with elevated reserves and low breakeven prices. In a recent article, I showed the chart below. As we can see, the Permian has mostly undeveloped wells, which bodes well for future production.
Image
Bloomberg
Related to the second advantage, the Permian also benefits from decent infrastructure, a favorable regulatory environment, and lower operational risks compared to emerging basins. Nonetheless, because of elevated production, more infrastructure is needed in the years ahead, which is one of the reasons why I'm also very bullish on the midstream industry.
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