The Permian is the most prolific basin in the United States and has been responsible for considerable oil and gas production in the world’s largest economy. It not only keeps the United States supplied with energy, but also supports its job market and economy.
Over the decades, the Permian produced billions of barrels of oil that helped power homes and fuel vehicles. Due to the advent of advanced drilling techniques, like horizontal drilling and hydraulic fracturing, operating in the basin has been highly economical, and hence is beneficial for upstream players even in low oil prices. With 2026 on the horizon, energy investors would be well served to watch leading Permian players like Diamondback Energy, Inc. FANG, Exxon Mobil Corporation XOM and Chevron Corporation CVX.
Permian: A Low-Cost Powerhouse for U.S. Energy
According to the U.S. Energy Information Administration (“EIA”), the production of total crude oil and lease condensate in the United States went up by 1.9 million barrels per day from 2020 through 2024. EIA added that just 10 counties in Texas and New Mexico were responsible for 93% of the production, and importantly, the Permian Basin encompassed all the counties.
Notably, in its latest short-term energy outlook, the EIA projects total crude oil production in the United States from the Permian to be 6.56 million barrels per day (MMBbls/D) in 2026, surpassing its estimated 6.54 MMBbls/D for this year and 6.28 MMBbls/D in 2024.
Most importantly, the rise in total production in the basin has been projected by the EIA, despite its expectation that the oil price will decline next year. The EIA projects in the short-term energy outlook that the spot average price of West Texas Intermediate (WTI) crude will reach $51.42 per barrel next year. This is significantly lower than the EIA’s forecast of $65.32 per barrel for this year. This strongly indicates that despite the softness in oil prices, production will increase in the Permian, as operating costs in the basin are low, implying a low breakeven price.
3 Stocks Leveraging Permian Strength for 2026 Gains
Considering the backdrop, investors should watch solid Permian-focused companies like Diamondback Energy, XOM, and CVX. All the companies currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Diamondback Energy is a well-known name among pure-play Permian players. In the prolific basin, FANG has a huge and high-quality drilling site, with the company estimating it at roughly 9,600 gross locations. The upstream energy major mentioned that those wells are economical even if the price of oil fell to $50 per barrel. Thus, with premium drilling inventories and an investment-grade balance sheet, Diamondback Energy is likely to sail through the softness in oil prices next year, unlike many of its peers.
ExxonMobil has a strong footprint in the Permian and is among the advantageous assets that the energy major believes will contribute to its long-term production growth. In the Permian, the integrated giant has been employing lightweight proppant technology and hence has been capable of boosting its well recoveries by up to as much as 20%. Notably, with the acquisition of Pioneer Natural Resources in 2024, XOM has enhanced its footprint in the basin, further strengthening its production outlook while realizing significant cost synergies. Thus, XOM is also well poised to gain in 2026, despite the possibility that oil prices are likely to remain soft.
Chevron also has a strong footprint in the Permian. CVX mentioned that it has an interest in one of every five wells in the most prolific basin. Over the years, while growing its operations in Permian, CVX has been able to generate more production while employing lower capital spending, thanks to advanced drilling techniques. Chevron added that to increase its oil and gas volumes, it is now employing significantly fewer rigs. Thus, like XOM, CVX is also strongly placed to combat the possibility of soft oil prices next year.
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Chevron Corporation (CVX): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis Report Diamondback Energy, Inc. (FANG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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