A Multi-Pronged Strategy to Sustain Growth Beyond Tight Oil’s Crown Jewel
The transformation of the United States into a global energy powerhouse over the past two decades is inseparable from the fracking-led renaissance of the Permian Basin. Once considered a mature and declining conventional oil play at the start of the 21st century, the Permian has grown into a global energy giant, second only to Saudi Arabia in crude oil and condensate production. U.S. companies, both independent and integrated, have played a pivotal role in this growth, amassing massive positions in the basin through drilling, innovation, and strategic consolidation.
As the basin approaches a production plateau and enters a new phase of its lifecycle, Independent Oil Companies (IOCs) must address a central strategic question: What comes after the Permian? David Clark, Vice President in Wood Mackenzie’s Corporate Strategy and Analytics team, offers insights into the future of tight oil production and the portfolio evolution needed for companies to thrive through the 2030s.
Permian Growth Isn’t Over—Yet
Despite a reduction in drilling rigs driven by weaker oil prices, production in the Permian is still increasing. In 2025, crude and condensate output is projected to rise by 200,000 barrels per day (b/d), reaching 6.6 million b/d. Although the pace of growth is clearly slowing, the basin still offers significant upside potential.
According to Wood Mackenzie’s forecast, the Permian is expected to add another 1.1 million b/d of production before reaching a plateau of 7.7 million b/d by 2035—assuming a real oil price of US$70 per barrel (WTI). Throughout this period, growth from the Permian is anticipated to more than offset production declines from all other U.S. tight oil plays.
A Basin of Enormous Value
For over a decade, the promise of low-cost barrels and substantial output has attracted major capital investment to the Permian. A combination of organic drilling, strategic acquisitions, and aggressive consolidation has turned the basin into a massive store of value for the U.S. energy industry.
Eighteen companies within Wood Mackenzie’s corporate coverage now hold a combined net present value (NPV) exceeding US$500 billion in the Permian alone. At the top of this tight oil corporate ecosystem is ExxonMobil, with a single-asset NPV10 of over US$100 billion—a valuation that matches or exceeds the entire global upstream portfolios of BP and TotalEnergies.
The other five major U.S. Permian players—Chevron, Occidental, Diamondback, ConocoPhillips, and EOG Resources—each hold basin assets valued at over US$40 billion, forming a tight group of dominant producers that continue to outperform their smaller peers.
The Performance Gap: ‘Haves’ vs. ‘Have Nots’
A clear divide is emerging within the Permian between the top-tier operators (the “haves”) and smaller independents (the “have nots”). The larger companies not only control more acreage but better acreage—the most productive and lowest-cost zones in the basin.
By 2030, this elite group of seven companies will hold nearly all remaining inventory with breakeven prices below US$45/bbl WTI. Their superior well economics are the result of scale, continuous operational improvement, and integrated value chains. These advantages allow them to consistently lower costs, improve recovery rates, and optimize production.
Conversely, many smaller operators are already experiencing deteriorating well performance. As they exhaust their most productive acreage, the remaining inventory consists of higher-cost, lower-margin prospects, making sustained growth increasingly difficult.
Is There Such a Thing as Too Much Permian?
The strategic value of the Permian is unquestionable, but over-concentration carries risks. Based on Wood Mackenzie’s projections, portfolios across the industry are becoming increasingly Permian-centric.
By 2035, the Permian will account for:
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Over 70% of upstream operating cash flow for Occidental, EOG, Devon, and Apache
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Nearly 50% for ExxonMobil, Chevron, and ConocoPhillips
While concentration in a high-return, low-carbon, and capital-flexible asset like the Permian is not inherently problematic, it raises questions about portfolio resilience and future-proofing. Companies must weigh the benefits of specialization against the need for diversification and geographic risk management.
What Are the Strategic Options for the 2030s?
The Permian has been the crown jewel of corporate portfolios, and replicating its combination of scale, return, and growth potential will be difficult—if not impossible. Yet, maintaining or growing production through the 2030s is a top priority, especially with longer-term oil and gas demand remaining robust.
For Smaller Players: Consolidate or Diversify
Companies with limited positions and no international exposure will find growth challenging. Moving into new unconventional basins, whether in the U.S. or abroad, brings significant technical and commercial risk. As a result, intra-Permian consolidation is likely their best path forward—combining two mature portfolios to reduce costs and extend productive life.
For the Majors and Large Independents: Maximize Every Lever
The “haves,” with strong Permian positions and global footprints, have more tools at their disposal:
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Optimize Permian recovery: Advanced technologies like enhanced oil recovery (EOR), artificial intelligence, and machine learning offer potential to significantly increase recovery rates from the current modest average of 10% or less.
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Leverage other tight oil plays: While smaller in scale, basins like the Montney (Canada) and Vaca Muerta (Argentina) provide viable growth paths.
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Explore new international shale: Shale basins in Saudi Arabia, Mexico, Algeria, UAE, Bahrain, Turkey, and Australia are emerging and have already drawn investment from U.S. majors and top-tier E&Ps.
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Pursue discovered conventional resources: Opportunities exist in established oil-rich geographies like the Middle East. These offer volume but generally lower value density compared to the Permian.
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Invest in frontier exploration: High-impact, early-stage exploration will remain a crucial lever for accessing low-cost, low-carbon barrels—the type needed to maintain portfolio integrity and long-term competitiveness.
