TGS Well Data Analytics (WDA) reveal that assets in the Delaware Basin remain competitive at $60/bbl oil, but quickly deteriorate as prices near $50/bbl.
Amid rising costs, production headwinds, and regulatory uncertainty, the latest Dallas Fed Energy Survey reveals a modest contraction in oil and gas activity for Q2 2025. Yet, despite the turbulence, TGS’s Well Data Analytics application continues to provide clarity and confidence in decision-making, highlighting key trends such as rising breakeven prices. In the Delaware Basin, breakeven prices rose from an average of $53/bbl in Q1 2024 to $58/bbl in Q1 2025—reflecting shifting economics that operators must consider in both planning and investment decisions.
The Q2 report shows a decline in overall business activity compared to the previous quarter. Oil production has reversed course and is now at its lowest level in over a year. Natural gas production has also declined, slipping into negative territory. Although upstream costs—such as input prices and lease operating expenses—are still rising, the pace of those increases has slowed slightly for E&P firms.
One of the most telling signals comes from this quarter’s special survey questions, which focused on operators’ drilling plans and current operational constraints. Nearly half of all E&P executives indicated they now plan to drill fewer wells in 2025 than originally expected. Among larger producers, 42% anticipate a significant reduction in drilling activity—driven in part by softening oil prices, labor shortages, steel import tariffs, and growing water management challenges.
TGS’s well economics dataset for the Delaware Basin continues to demonstrate the play’s resilience amid changing market dynamics. In a baseline scenario using $73/bbl oil, $0.9/bbl water management costs, and $10.8 million in well capital costs (D&C), the internal rate of return (IRR) averages 40.8% for the selected asset (Image 1). Under a $60/bbl scenario—with $1.1/bbl water costs and $11.5 million in capital costs, reflecting feedback from E&P respondents—IRR declines to 14.4%, yet still signals the competitiveness of top-tier acreage. At $50/bbl, IRR falls sharply to just 2.1%, underscoring the basin’s heightened sensitivity to commodity prices even with only modest cost inflation (Image 2).
Importantly, when asked if $60/bbl WTI would impact production, 61% of E&P respondents said their firms would reduce output. At $50/bbl, that number spikes to 88%, with nearly half expecting significant production declines. These figures validate the importance of benchmarking economic breakevens across operated and non-operated acreage to ensure capital deployment stays within margin-protected thresholds.
The survey also explored water management challenges—an emerging cost and risk consideration. Over 70% of respondents expect water-related constraints to limit drilling in the Permian Basin within the next five years. TGS’s well-level completion, cost, and water data allow clients to anticipate and model the financial and operational implications of such constraints across both asset and portfolio levels.
While uncertainty is increasing, as reflected in the Outlook Uncertainty Index rising to 47.1, industry participants remain cautiously engaged. Year-end WTI expectations average $68/bbl, and Henry Hub gas is projected at $3.66/MMBtu, down slightly from Q1 estimates.
TGS Well Data Analytics enables operators, investors, and analysts to benchmark against real-time market sentiment and macro forecasts with confidence. Whether you're reevaluating your 2025 drilling program, adjusting capital allocations, or simply monitoring value creation under varying price decks, TGS datasets can provide critical clarity.
For more information about TGS Well Data Analytics or to schedule a demo, please contact us at WDPSales@tgs.com.
Image 1. Economics Dashboard for a Delaware Basin Asset in WDA
Baseline scenario at $73/bbl oil with $0.9/bbl water management costs and $10.8MM in drilling and completion capital expenditures; economic inputs and outputs shown on the right.
Image 2. Scenario-Based Economics Dashboard for a Delaware Basin Asset in WDA
Scenario 1 - $60/bbl, with $1.1/bbl water management costs and $11.5MM in drilling and completions costs per well (10,000 ft lateral) on the left. Scenario 2 - $50/bbl, with $1.1/bbl water management costs and $11.5MM in drilling and completions costs per well (10,000 ft lateral) on the right.
