Despite Low Prices, This Company Wants to Drill for More Oil in the Permian Basin

One company wants to invest in new drilling sites in the Permian Basin, despite the current surplus of oil on the market.

By Lucia BenavidesNovember 12, 2015 11:04 am

Earlier this week, Redhawk Resources, a Canadian-based company,  announced they’d be investing $15 million dollars into drilling and development in the Permian Basin. This comes in the midst of a massive downturn in oil prices, industry layoffs, office closures and other cost-cutting measures. Redhawk says despite the slump, they want to plow ahead into drilling and development.

Mella McEwen, Oil & Gas Editor at the Midland Reporter-Telegram, says the company chose the Permian Basin because it is the most economical area in the world, and they’re looking to the future of the investment.

“They are taking a long-term view of the industry, rather than just a snapshot of today,” McEwan says. “They see tremendous potential in the Permian… down the road.”

Normally when oil prices are at an all-time low, the remedy is capping wells, not increasing oil output. Redhawk has another idea about what’s needed, McEwan says. Demand will inevitably rise and many of the Organization of Petroleum Exporting Countries and the non-OPEC countries won’t have the resources to meet that demand.

“Oil producers out here are reporting production increase,” she says. “As a matter of fact, the [U.S. Energy Information Administration] says Permian will increase its production by 17,000 [barrels] a day, bringing it up to 2 million barrels a day by next year. That is kind of being offset by declines in other areas.”

Will the investment bring new jobs to the area? McEwan says most likely. “All of these investments out here are certainly good news,” she says. “I don’t think these companies will be rushing out to hire a lot of people initially. It will probably maintain jobs, probably create some jobs, but I think it should lay the foundation down the road for jobs in the future as the industry recovers.”

Listen to the full interview in the audio player above.