Why do Oil Companies Love the Permian Basin So Much?

If you've been following the oil industry for the past few years, you've probably heard about the Permian more times than you can count.

In this clip fromIndustry Focus: Energy, Motley Fool analystsSean O'Reilly and Taylor Muckerman explain why oil producers are so excited about drilling in the Permian basin.

A full transcript follows the video.

A secret billion-dollar stock opportunity The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.


This podcast was recorded on Aug. 11, 2016.

Sean O'Reilly: All I've heard for the last few years is Permian, Permian, Permian, Permian. They're not talking about dinosaurs, so ...

Taylor Muckerman: Well, in some ways, they are because apparently oil, it came from dinosaurs, right?

O'Reilly: Supposedly. It's mostly algae.

Muckerman: Mostly algae and what-not.

O'Reilly: Why is the Permian so great?

Muckerman: A, it's relatively new compared to the Bakken and the Eagle Ford, in terms of drillers rushing toward it. It's also multiple, we call it a stacked play. There's multiple shale plays stocked on top of each other.

O'Reilly: That's not the case in Southern Texas with Eagle Ford?

Muckerman: To some degree, but the Permian is a deeper field, for the most part. It also is projected to have tremendous reserves. When you look at it, it's the largest production per barrel, per day, of any field in the United States, for oil. It's second in gas. It's producing both at very high levels.

O'Reilly: Wow. Is Marcellus top for gas?

Muckerman: Marcellus is more than double, almost triple, the Permian, in terms of gas.

O'Reilly: They've been hitting that for 15 years.

Muckerman: Yes, but Marcellus has next to zero oil. Whereas the Permian is offering that almost one-for-one blend in terms of being the leading oil-producing region and the second-leading gas-producing region. There's a lot more for investors, maybe, to be cheery about, because there's some diversification in terms of what you might be drilling for, and if the reserve calculations are correct, there's a very long timeline for this field, depending on where you're drilling. Obviously, it's a huge field. Not everyone is going to have the same timeline. The prospects for having decades worth of oil and gas to drill for are there in this field.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.