Permian Focus

02-Aug-2018

By: Eric Danos

This market is hot. Everywhere I go the Permian is being talked about. It’s in the news, it’s the subject of political debates and it’s being talked about throughout our community. The Permian is so significant on the world stage that it is reshaping long-standing international politics because of its influence on world energy markets. Grab a seat – we are on the front row to history being made.

In some ways, the Permian has become a victim of its own success. Growth has outstripped the needed infrastructure, so the industry is working hard to catch up. In a recent town hall, we talked about a price discount that many operators in the Permian receive for their oil. This discount is as much as 20%+ when compared to oil sold in other regions. This happens because there’s A LOT of oil without enough pipelines to move it all. Pipeline companies are building like crazy, but they can’t fix this overnight. Starting later next year and continuing afterward, we will start to see relief to this pricing issue as new pipelines come on-line.

Other infrastructure is being strained as well. Some very large operators and service companies are teaming up to invest in the region. They are going to help build roads, for example, so that we can move around the area more efficiently. I was talking to one of our employees who just returned from the western side of the Permian in New Mexico (actually the Delaware Basin). The experience he described was one where you are given a set of GPS coordinates to find a well-pad. You drive around and speculate on which unpaved, unmarked ranch road will get you to the well-pad. It can take some guessing and a few wrong turns before you get to where you need to be. In our age of soon-to-be self-driving cars, Waze and Google Maps, this seems like a step way back in time. But it’s the reality of the Permian today.

All of this creates opportunity, and Danos is well positioned because we have been focused on this market for several years. We continue to build and bring leaders to the Permian. Recently we announced that Kevin Biringer and Corey Lecompte would be relocating from Houston and Gray, respectively, to join the rest of the already excellent Permian team in place to help solve big challenges for our customers. Our growth there is demanding our own infrastructure program. We are studying options for building an office and service yard campus. A decision on this is coming soon.

The Danos Production business continues to be in demand while we put the finishing touches on the first of a group of very successful construction projects.


We still have some hard work to do to bring down the cost of executing projects in the Permian. But we will get better as we learn and grow. If we can really bring down the cost of project execution and maintain our commitment to operational excellence, the reward will be great. We will earn many, many more projects and build a legacy in this market. It’s an exciting time to be in the energy business, especially in the Permian!

Eric Danos

Eric Danos oversees the company’s finance, safety, human resources and land activities. A third-generation owner and member of the Danos Board of Directors, Eric began his career at Danos in 2004 as an operations manager for the international labor division. Eric has a B.S. in Marketing from Louisiana State University and an M.B.A. from Stanford Graduate School of Business. Read more...



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