And as more data is released, the more convinced we are that this incredible growth will continue. According to Tudor Pickering Holt & Co., by 2025, oil production is projected to more than double to more than 3 million barrels per day. That’s about as much oil that is produced these days by Kuwait, the third largest oil producer in OPEC.
Natural gas in the Permian Basin is also estimated to substantially increase, growing from about 4.3 million cubic feet per day to more than 7 million cubic feet per day.
When it comes to investment plays, “the Permian is red hot right now,” says Global Hunter Securities. The research firm finds that, on a year-to-date basis, if you invested in the “pure-play” companies, including Concho Resources (CXO), Diamondback Energy (FANG) and Pioneer Natural Resources (PXD), that have a resource base in the Permian area, your portfolio would be up an incredible 39%.
By comparison, over the same timeframe, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) increased only 15%. The S&P 500 Index, which has had a great run so far, rose 16%.
Pioneer has been a long-term holding in the Global Resources Fund (PSPFX), and has benefited the fund with its handsome return of about 60% so far this year. We continue to be bullish on the company due to its substantial presence in the Permian. Pioneer has a net resource base of about 7 billion barrels of oil equivalent across more than 40,000 drilling locations in the Permian, according to Global Hunter. This enormous resource base translates to decades of drilling ahead.
Here in San Antonio, we’ve personally witnessed several economic benefits that have positive repercussions for the entire U.S. Locally, there’s been a rapid monetization of energy assets. Businesses have been building incredible expertise and creating a growing number of high-paying jobs. For the rest of the country, the effects of cheaper gas and readily available energy create enormous potential for a more competitive United States of America.