The Oil Stocks to Own When the Permian Peaks

In August 1931, Texas treated oil like a public threat.

The East Texas field had erupted into a frenzy of drilling, and crude prices didn’t just fall. Oh no, dear reader, they utterly collapsed into the kind of price you’d expect to pay for a pack of gum. 

By the time Governor Ross Sterling stepped in, the answer wasn’t a committee or a forecast. 

It was martial law. 

In short order, Texas Rangers and the National Guard were shutting wells and enforcing order, because the “surplus” wasn’t some academic exercise, it was a flood of black crude sloshing into the market faster than the market could absorb them. And this absolutely ripped the economics out from under everyone. 

More than 1,600 wells were shut down. 

Today, we’re living through the modern version of the same mistake. We know there are far too many people out there confusing the media’s “supply glut” narrative with the real-world ability to keep oil flowing smoothly.

And you know just as well I do that a paper surplus is easy to print. 

But a real, physical surplus — one that survives weather, logistics, decline rates, and the brutal arithmetic of depletion — can be a lot harder to find… especially today.

Let’s start with a little headline reality…

The Permian Basin — a shining beacon and darling of U.S. oil output growth for more than a decade —  may finally be hitting a production ceiling. 

That’s more of a problem than most people realize. 

The EIA’s latest near-term outlook is blunt about the direction of travel. It expects Permian crude production to stay essentially flat at about 6.6 million b/d in 2026, after averaging around that level in 2025, and then edge slightly lower in 2027 as rig activity declines alongside weaker prices. 

If you want the simplest “why this matters” stat, it’s this: Nearly ALL of U.S. oil production growth since 2020 came from a tiny slice of the Permian map. 

In fact, the EIA found that ten counties in the Permian accounted for 93% of U.S. oil production growth between 2020 and 2024!

That concentration is energy security in both directions… 

It’s a strength because it made the U.S. the world’s supply shock absorber, helping underpin record production and export capacity. 

Unfortunately, this is also a vulnerability because when that one machine stops growing, the whole growth story sputters.

Of course, this isn’t to mention the fact that activity at another powerhouse oil region — North Dakota’s Bakken play — is coming to a screeching halt.

Folks, we’re seeing the “physical” side of our supply vulnerability in real time. 

Further exacerbating the situation was this month’s winter storm, which shut in as much as 2 million b/d of U.S. crude output, with much of the impact centered on the Permian. And operators expected days — not hours — before a full recovery.

That’s an easy reminder that we don’t need a geopolitical crisis for the market to lose more barrels. 

Now factor in other catalysts that have been ignored for too long — decline rates and drilling activity. Remember, oil output in the Permian basin can remain high, but maintaining it takes constant reinvestment because shale wells decline quickly and the basin’s “base” is enormous. 

And when prices sag, drilling incentives fade and the plateau becomes a harsh reality.

Think about it… if the Permian Basin’s oil production is growing, the U.S. can export more, refill inventories more comfortably, and absorb disruptions with less price violence.

When production turns flat (which it is!) the margin for error shrinks, and every disruption — be it storms, OPEC policy shifts, shipping constraints, or geopolitics — has a bigger impact on price and policy.

And here’s the catch that’s lost in the noise… 

“Flat” can still be bullish.

Look, a production plateau at roughly 6.6 million b/d isn’t a collapse, but it does change the formula. 

What it truly means is that the era of the Permian Basin bailing out global supply shocks and making the United States a global swing producer is over. 

And that makes every barrel extracted in West Texas going forward even more important. 

If the market is moving from Permian growth to Permian maintenance, the investment opportunity shifts with it.

The winners won’t be the companies that simply own Permian acreage, but rather the elite operators that can keep output steady — or heaven forbid grow output — all while spending less per barrel to do it.

And you can bet that the “headline giants” aren’t the cleanest way to play this next chapter. Big Oil players like Exxon and Chevron have superb assets, but their Permian scale has increasingly been purchased at premium prices, including Exxon’s all-stock deal for Pioneer valued at about $59.5 billion and Chevron’s acquisition of PDC Energy with a total enterprise value of $7.6 billion.

The real hidden Permian gems — the ones people tend to ignore until the narrative breaks — look different on paper. They’re the quieter operators with large blocks of contiguous acreage that allow longer laterals, repeatable well designs, and lower unit costs. 

I’m also talking about strong drilling and completion execution, not just big land positions. 

When the market finally accepts that the Permian’s growth engine has cooled, the premium will migrate toward those “quietly efficient” Texas drillers. 

Not because they’re flashy, mind you, but because they can keep Texas on top without paying an exorbitant toll on their war chests. 

That’s the setup we want. 

Mark my words, the next bull phase in oil won’t just be about higher prices. The real value will come from those who can still drill profitably, consistently, and at scale in a basin that’s no longer handing out easy growth.

And once that reality becomes consensus, the best-positioned names won’t stay hidden for long. 

Go ahead and check this one out for yourself right here.