Very Small Glimmer of Hope in Permian Basin

The Texas Permian Basin Petroleum Index in August posted its first monthly increase in 21 months, increasing by a tenth of a point to 208.6 from July’s 208.5. While this didn’t make economist Karr Ingham giddy, he did allow that “the turn upward is a long-awaited milestone.” He also noted that the monthly average rig count in August was 160, an increase from the 139 reported in July.

Ingham did acknowledge several caveats in his report, however. First, the number of drilling permits issued in the Permian Basin still hasn’t reached bottom. August was down by close to 20%, compared to the first eight months of 2015. And those first eight months were, in turn, “down by 55%, compared to the previous year,” Ingham observed.

Ingham also called for continued contraction in the Odessa Economic Index, though a possible turnaround could take place late this year or early next year. Still, the upward trend in the Permian Basin Petroleum Index provided a glimmer of light. If it holds, Ingham noted, it could “signal the technical end of the contraction in the Texas Permian Basin energy exploration and production economy.”

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