Operators are increasingly landing laterals in deeper Midland Basin formations that are showing up with more gas than the traditional uphole targets, a new analysis shows.

Three Permian Basin gas takeaway projects are already underway and expected to add 4.6 Bcf/d of capacity by year-end 2026, while construction that could yield another 5.9 Bcf/d is being considered.

“We believe all will be needed,” said Tim Rezvan, an analyst for KeyBanc Capital Markets, commenting on the findings from his study of deeper Midland well results.

Already, the overall Permian Basin’s gas weighting has been growing, he said—from 1.71 Mcf per bbl of oil in 2017 to 3.09 Mcf currently.

Deeper-target wells in the Midland are turning up with gas weightings of between 28% and 48% compared with traditional, shallower target wells’ average of 22%.

“While still early days, the pivot to deeper targets—defined as Wolfcamp D and below—is clearly underway,” Rezvan wrote.

He found that 7.6% of new wells in the Midland in 2024 were landed in Wolfcamp D or deeper, up from 1.9% in 2021.

As operators are quickly drilling their shallower prospect inventory in the Spraberry, Jo Mill, Dean and Wolfcamp A, B and C, “we expect focus on deeper intervals to increase,” he added.

But deeper hydrocarbon targets are typically more “cooked” than shallower depths, surfacing more gas versus oil overall, he noted.

BOE per lateral foot

In addition to a larger gas cut, the deeper targets are surfacing fewer boe, he found.

For example, 492 wells had been landed in Wolfcamp D from 2016 through 2024.

Among those wells, the 12-month average output was 18,793 boe per 1,000 lateral ft, while shallower formations have averaged 19,042 boe per 1,000 lateral ft.

The D’s oil cut was 72%, while shallower formations’ weighting has averaged 78% oil.

“The same trend can be seen for the Lower Pennsylvanian and Mississippian, and Woodford-and-below intervals,” Rezvan said.

The 122 wells in Lower Pennsylvanian/Mississippian, which include the Barnett, Atoka and Strawn, have averaged an oil weighting of 66%.

Their first 12-month BOE per 1,000 lateral feet averaged 20,920.

Meanwhile, in the 10 Woodford and deeper wells in the Midland to date, the average was 14,962 boe per 1,000 ft. Their oil cut was 52%.

The net effect will be “a gassier production mix in the Midland going forward, which exacerbates the importance of natural gas takeaway projects underway,” he concluded.

Among the deeper wells through 2024, most of the total 7.6% share in 2024 were put in Wolfcamp D (5.7%), while Lower Pennsylvanian/Mississippian accounted for 1.8% and 0.2% in Woodford-plus.

Using the Enverus database of more than 19,000 laterals landed in the Midland since 2016, Rezvan focused the deeper-target study on the Midland, while he found Delaware operators are still working through their shallower inventory.

Among the more than 19,000 wells, 624 have been landed in the D and deeper with 492 of those in the D alone.

Lower Penn, Mississippian

Rezvan found 47 new laterals in the Lower Pennsylvanian/Mississippian formations in 2024, up from five in 2021, primarily by Occidental Petroleum and Exxon Mobil, which have made 83 of the 122 laterals landed in the rock beginning in 2016.

A sweet spot appears to be in western Ector County near the Central Basin Platform, where these wells have performed better than the average from any other Midland target in 12-month boe per 1,000 lateral feet, Rezvan found.

Their oil cut is 56% compared with 78% across the Midland, but their oil output was 13,850 bbl per 1,000 feet versus the Midland average of 14,869.

An EOG Resources well in Dawson County in Lower Pennsylvanian had a 90% oil cut from its first 12-month output of 19,904 boe per 1,000 feet, he added.

As for the 10-well Woodford-and-deeper dataset to date in the Midland, it’s “still early days,” Rezvan wrote.

Operators put five laterals in this in 2024 alone and output and oil weighting varied, he found.

Civitas, Wolfcamp D

An exception to the gassier finding is what’s coming from Wolfcamp D wells along the border of Glasscock and Midland counties, he reported. The D wells in this area are outperforming laterals that have been landed uphole in the Midland.

The three Midland operators who’ve made the most D wells, 47%, are also the most active along the Glasscock-Midland border, he wrote: Oxy, including those it picked up from CrownRock; Diamondback Energy, including those it gained from Endeavor Energy Resources; and Exxon Mobil, including from Pioneer Natural Resources.

“We expect activity in the Wolfcamp D interval to continue rising in the coming years as operators manage inventory depletion, fine-tune D&C techniques and work to lower costs,” Rezvan wrote.

Civitas Resources put 16 wells in Wolfcamp D in 2024—11 of them in Reagan County—that have outperformed the Wolfcamp A/B in both volume and oil weighting, he found.

The D inventory is a bonus, he added, since Civitas didn’t assign value to it when winning bids for the property from Hibernia Energy III and Vencer Energy.

“Civitas management cites well costs that are 5% to 10% higher for the Wolfcamp D versus the shallower Wolfcamp A and B intervals but productivity that is 15% better on an oil-per-1,000-ft basis, implying similar or better well-level [returns],” Rezvan wrote.

This year through April, Civitas landed 20 more D wells. Meanwhile, Civitas has not yet landed wells deeper than the D, Rezvan added.

Other operators

Diamondback Energy has 16 Wolfcamp C laterals in the bag beginning in 2016. Twelve of them were brought online in 2024. Among the total, eight are in Martin County; five in Glasscock; two in Midland; and one in Andrews County, Texas.

“We see mixed results compared to the industry average,” Rezvan wrote.

The D wells’ first 12-month volume averaged 17,497 boe per 1,000 ft, while the all-operator D-well average has been 18,741.

“Oil cuts for both at 73%.”

The E&P sees 1,004 net future D locations in its leasehold, Rezvan noted, that could make a 10% return at $50 oil/bbl, $20/bbl NGL and $3/MMBtu gas with well costs of $550/ft.

Vital Energy has put 20 in the D and two in the Barnett in Upton and Glasscock counties. It also has two wells in the Barnett in Crane County on the Central Basin Platform.

Among its D wells in the Midland, 10 were made in 2024. The average well produced 13,158 bbl per 1,000 feet in its first 12 months, “4% below the average Midland Basin Wolfcamp D well.”

“We expect Vital to briefly pause its deep-interval delineation this year, given [its] heavy Delaware-weighted program and a ramp in U-turn wells—12 of its estimated 27 Midland wells this year—targeting shallower intervals.”

Meanwhile, SM Energy has eight in the D and two in the Woodford-plus.

The latter two, both in Upton County in its Sweetie Peck area, have made 84% more first six-month oil per 1,000 lateral feet than the average of eight other Woodford-plus wells with at least six months of data, Rezvan found.

SM plans four more.

“We look forward to learning if past results are repeatable.”