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Brian Alfaro - On the Positive Investment Outlook for Permian Basin

SAN ANTONIO, TX / ACCESSWIRE / April 25, 2018 / The Permian region covers 53 million acres of land from west Texas to southeast New Mexico, and its vast reserves of shale oil has allowed the US to become one of the largest sources of crude oil supply in the world. In 2017, The Permian basin alone accounted for 30% of total US production. Despite recent price volatility, the outlook for the region will continue to be positive due to its appeal to investors, says Brian Alfaro.

McKinsey forecasts that crude oil output from US shale will reach 9 million barrels per day by 2025, with capital spending growing 25% per year to 2021. According to the US government's Short Term Energy Outlook, the Permian is expected to supply 2.9 million barrels a day by the end of 2018, a year on year increase of 500,000 barrels per day. ExxonMobil, one of the most active producers operating in the Permian, announced plans to increase daily output to 600,000 barrels of oil equivalent by 2025.

Project economics for US shale projects are very competitive when compared to other global light oil plays. The Permian basin's 2017 breakeven price of $41 per barrel enabled producers to stay profitable despite a historically lower global oil price environment since 2014. For many producers, operational efficiency gains coupled with rising output has led to rising profit margins, notes Brian Alfaro. Energy investors are also drawn to the basin for its "short cycle" nature. Unlike "long cycle" oil projects, (i.e. in deep water or the Arctic), which take years to develop and are often overbudget, shale projects are relatively less complex. Operational spending, including for drilling and well completion, can be increased or decreased over a matter of months, making a typical shale well more responsive to volatility in oil prices. Companies can better control costs by ramping down spending when market conditions are unfavorable. Also, payback periods can be as little as 1.5 years for shale wells, providing investors with positive cashflow more quickly than other energy assets. In contrast, US deep water oil projects can have a payback period of more than 10 years.

The economics of the Permian are also buoyed by the recovery of the West Texas Intermediate (WTI) oil price benchmark from its 2014 lows. WTI ended March 2018 at $65 per barrel, much higher than its February 2016 low of $30 per barrel. The US Energy Information Administration forecasts that WTI will average $58.68 per barrel in 2019, a 35% rise from 2016.

Brian Alfaro is the President and CEO of Silver Star Resources, a Texas-based energy and petroleum company. Silver Star brings its world-class team of geologists, geophysicists, engineers, operators, and financial managers to support the execution of energy projects. The company specializes in shale, limestone, unconventional horizontal, and conventional drilling. Along with nearly 20 years of experience in the US oil industry, Brian holds a Bachelor's Degree from Texas Tech University and a Master's in Communications from the University of the Incarnate Word. In his spare time, he is a proud supporter of National Multiple Sclerosis Society, The Miracle League, First Book San Antonio, and Family Violence Prevention Services.

Brian Alfaro - Oil and Gas Industry Mogul and Dedicated Philanthropist: http://brianalfaronews.com

Brian Alfaro (@alfaro_brian) - Twitter: https://twitter.com/alfaro_brian

Brian Alfaro - On the Importance of American Oil Production: https://finance.yahoo.com/news/brian-alfaro-importance-american-oil-161000370.html

Contact Information:

BrianAlfaroNews.om
www.brianalfaronews.com
contact@brianalfaronews.com

SOURCE: Brian Alfaro

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