End is near for ‘frack holiday’ as Permian expects 2019 boom

Bloomberg

The oil fields of West Texas don’t sit still for long. Take Carrizo Oil & Gas Inc.’s operations, for instance. Just three months after moving drill rigs out of the Permian Basin because of pipeline shortages, the Houston-based explorer is already talking about bringing them back in the middle of next year.
That’s one of several signs the end may be near for a self-imposed slowdown executives call a “frack holiday.”
The result: Carrizo will reach an “inflection point” in 2019 where both production and cash flow begin to rise together, Chief Executive Officer Chip Johnson said on a conference call. In other words, things will soon be booming again.
Carrizo is among many smaller operators forced to slow activity in the US’s biggest oil field towards the end of this year after the Permian’s rapid production growth overwhelmed pipelines. The lack of conduits left oil almost trapped, lowering in-basin prices to almost $18 a barrel, or 26 percent, below the US benchmark in September.
But with at least three major pipeline projects scheduled to come online next year, producers are now seeing the problem as a mere footnote in the basin’s ongoing story of surging production growth. Pioneer Natural Resources Co. has enough pipe space to transport all its oil out of the basin through 2020 while Diamondback Energy Inc. has substantial capacity coming on new pipelines next year, the companies said.
“It will be a series of events throughout 2019 that occur” to ease the bottleneck, Halliburton Co. Chief Executive Officer Jeff Miller told Bloomberg TV. “It’d be easy to see, as we finish the year, things being perfectly normal.”