Permian-NM, the region which as recently as last quarter shocked the market with record overperformance, has not yet completed its record setting production surge. Producer efficiencies, which have surprised even the producers themselves, combined with a steady increase in fracking activity has lead to a 13 month high in monthly completions for the month of November.
Our Short-Term Forecast Model for the region expects natural gas production to grow ~0.50 bcf/d over the coming two months. This is a material departure from our initial expectations of a decline of ~0.30 bcf/d, set at the time of the Long Term Forecast quarterly update.
While natural gas prices have fallen dramatically in recent weeks it takes time for producers to adjust their resource development plans. Furthermore, the Permian is driven primarily by oil economics and most gas there is associated. We will continue to monitor fracking activity closely in the region for signs of divergence from the current growth course.
