Independent oil companies eye Permian production boost

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Three months after the war in Iran sent crude prices soaring, oil producers in the biggest U.S. oil field are starting to ramp up their production.

The catch: The new push may only boost production by about 250,000 barrels a day, too little to lower the price of oil or provide relief for drivers.

Independent drillers have begun adding rigs in the Permian Basin, albeit slowly, according to the data analysis firm Enverus. And the same companies are working through a backlog of wells that can be brought online quickly.

The trends show that producers expect high oil prices to last into 2027 because it will take that long for the new wells to come online. And the volume of oil expected from the new activity isn’t likely to bring them down.

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As recently as January, benchmark U.S. oil was trading below $60 a barrel and companies were shutting down rigs and slowing production. Permian Basin rigs dropped from a high of 257 last June to 221 on Jan. 1, according to Enverus data.

When the U.S. began bombing Iran in February, sending crude prices above $90 a barrel, producers were cautious about drilling new wells because they were concerned that the price increase wouldn’t last. Independent producers, particularly shale drillers in the Permian Basin, are typically willing to take on more risk than major oil companies.

The price of oil has traded above $90 a barrel this week as sporadic violence continued in Iran and other Persian Gulf nations.

Some small operators in the Permian Basin have opted to finish off what the industry calls drilled but uncompleted wells (DUCs) that haven’t been hydraulically fractured, because it brings on production faster than new drilling, said Kirk Edwards, president of Latigo Petroleum in Odessa, Texas, and a former chair of the Permian Basin Petroleum Association.

“It’s a definite interim strategy,” Edwards said in an interview. “They’re trying to accelerate their return on investment with these $90–$100 oil prices, so they’re trying to get as much oil, everybody is trying to get as much oil in the market as they can right now, to take advantage of these prices.”

Diamondback Energy, a shale producer based in Midland, Texas, has 73 unfracked wells as of April 2026, the most among independent producers, according to data analytic firm Rystad Energy. Diamondback announced in May that it will deploy five fracking crews to complete some of them.

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The number of drilling rigs in the Permian Basin has been climbing, too, hitting 245 in May, according to Enverus. The number dropped to 240 this week.

Some operators in the Permian are also looking for new places to drill. A group of independent shale producers obtained 761 new drill permits in the first quarter of 2026, up from 514 in the last quarter of 2025, according to Rystad.

Among gas-focused producers, some independent companies are not expanding operations due to low gas prices, said Michael Banschbach, an oil and natural gas marketing consultant. Gas prices at the benchmark Henry Hub have stayed below $3.50 per million British thermal units most of this year, despite the war in the Middle East.

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One of the reasons the rig count — and by extension, oil production — isn’t growing faster is the way the Permian Basin has changed in the last decade.

Major oil producers like Exxon Mobil and Chevron have bought many of the independent companies that helped develop shale drilling, and they’re more cautious about ramping up production when prices rise.

The majors control about 70 percent of the best drilling locations in the basin, Enverus estimated in April. And although they expect their production to rise, large companies can take a long-term view about price trends.

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