The Permian Basin, the beating heart of U.S. shale oil production, is experiencing a notable contraction in drilling permit activity this spring. Based on a combination of historical data and AI-driven time series forecasting, well permit volumes from March through May 2025 are expected to total approximately 1,790 permits — a sharp decline from the 2,304 permits issued during the same period in 2024.
🤖 AI-Based Forecasting Highlights
Using Holt-Winters exponential smoothing, an AI time-series model, we forecasted new well permits for May 2025 based on actual licensing trends from January 2024 to April 2025. The model fills in missing daily data and detects short-term trends, allowing us to project ~160 new permits for the remainder of May 2025. This projection is then combined with actual records from March and April to yield a clear quarter-over-quarter view.
Top 5 Operators by Well Permits in the Permian
🛢️ Oil Prices and Market Pressure
Oil market fundamentals have shifted. In early 2024, WTI crude prices averaged $77–$80/bbl, whereas by Q2 2025, prices have softened to $60–$70/bbl. This price compression has forced operators to reconsider marginal projects and scale back their drilling schedules to preserve capital efficiency.
🔧 Rig Count Cuts Amplify the Slowdown
Baker Hughes data shows a clear pattern: the Permian rig count has declined from 297 in April 2024 to 284 in April 2025. This reflects operator strategies prioritizing cash flow over production growth, especially as many have already harvested their highest-return inventory.
📊 Strategic Implications
The AI-forecasted decline in well permits is not just a data point — it signals the broader reset occurring in U.S. shale. While operators still hold large inventories of low-breakeven projects, sustained drilling activity is essential to offset shale’s steep natural declines.
The industry is at an inflection point: those who can combine capital discipline, drilling efficiency, and smart forecasting will be best positioned to navigate a volatile energy landscape.
