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Permian Basin Gas Price and Fundamentals

April 17, 2025 | Jay Stevens

Updated April 17, 2025

The Waha basis curve has been extreamly weak up until very recently; cash prices turned negaitive in March as egress out of the basin was limited due to high production and maintenance. Production is only expected to increase from here to fill the new egress that Matterhorn provided. In times of pipe maintenance, planned or unplanned, spot market Waha prices have the potential to realize negative.

Commentary

April 9: The Waha curve has improved significantly over the past few trading sessions. The Winter '25–'26 basis strip has strengthened by 88¢ off the lows to $-1.76 as of April 8. Summer 2026 has also improved materially. A decline in Henry Hub prices has been a key contributor to the improvement in Waha basis, along with the conclusion of some Permian maintenance.
The rapid rebound in Waha may also be tied to traders who were caught short and forced to exit positions. Blaming trade flow or positioning makes logical sense to us, as the magnitude of the price improvement is difficult to explain by maintenance and Henry Hub relationship alone. We’ve heard that multiple speculators experienced material losses.
The Waha forward curve had been under considerable pressure from December through the end of 2026. We’ve long highlighted the risk in the mid-2025 to late-2026 period, as no significant new pipeline capacity is expected until the second half of 2026. One exception is the Matterhorn pipeline, which is expected to add the final 500 MMcf/d of its 2.5 Bcf/d nameplate capacity by mid-2025.
Waha cash prices turned negative for the first time in 2025 on Friday, March 14. The combination of high production levels and pipeline maintenance on El Paso and Whistler contributed to the negative pricing.

 

Waha Basis Outlook and Notes
Winter '24-'25
Matterhorn (2.5 Bcf/d) now online
This helped relieve basin egress stress
October and November maintenance had been offsetting new capacity and straining Waha pricing as low shoulder season demand persist
Flow data was pointing to there being more new gas hitting the market than previously thought
Summer '25
Matterhorn has flowed at higher than anticipated rates with Permian supply at higher than expected levels. Therefore, this part of the curve has been under heavy selling pressure as egress is expected to be tight.
There could be times of low cash prices like 2024 in low-demand shoulder months and or times of pipeline maintenance . Cash prices went negative for the first time in 2025 on March, 14.
Winter '25-'26 & Summer '26
If supply growth is steady (oil prices), then 2Q ’25 through late ’26 is a period of price concern. The Permian’s next takeaway project doesn’t come online until 3Q of ’26. Similar to Summer 25 in terms of price risks 
Possible overbuild in outbound capacity as Blackcomb, GCX expansion, and Hugh Brinson come into service
The forward curve reflects this reality as Cal '27 is priced much higher than Cal '25 and Cal '26

 

 

For more discussion on basis price moves and the current forward curves:

JUMP TO OUR OUTLOOK AND CHART PACK 
For more discussion and charts, jump to our outlook and chart pack. Remember, the local market is influenced by the broader gas market. Consult our Gas Macro Outlook for more. 

 

Recent Market-Relevant Events 
4.03.2025
WhiteWater moves forward with Traverse Pipeline

Read More
 
2.06.2025
MPLX is poised to send more Permian gas to the Gulf Coast.

Read More

 
1.31.2025
Blackfin Pipeline gets approval to build lateral connection to LNG

Read More

 
Infrastructure Outlook 
The basin suffers from persistent oversupply compared to the amount of egress pipeline capacity. This affects the gas market more than it does crude oil, mostly because of aggressive additions in oil takeaway due to oil’s larger revenue share for almost all operators in the area. 

 

As of 4/21/2025

For a discussion of production outlook:

JUMP TO LOCAL SUPPLY 
Below are the most market-relevant infrastructure projects that appear to be funded and going forward. The projects that offer intra-region capacity (egress) are also shown in the chart above.
Note: Deeper discussion included below the map.
 

 
Gas Pipeline Projects

Matterhorn Pipeline

In-service date: 3Q 2024
Capacity: 2.5 Bcf/d

Source: WhiteWater

Matterhorn Pipeline - Whitewater Midstream's 2.5 Bcf/d pipeline entered service in the fall of 2024. The pipe originates in Waha and moves gas toward Katy, Texas. 

 

Blackcomb

In-service date: 2H 2026
Capacity: 2.5 Bcf/d

Source: WhiteWater

Blackcomb - WhiteWater Midstream and Targa are moving ahead with building a new 42-inch, 365-mile natural gas pipeline from the Permian Basin in West Texas to the Agua Dulce hub in South Texas. The startup timeline is 2H 2026 and will transport up to 2.5 Bcf/d.Shippers include Devon, Diamondback Energy, Marathon Petroleum, and Targa. Will source in the Midland Basin and the 3 Bcf/d Agua Blanca pipeline system in the Delaware Basin owned by WhiteWater and MPLX.

 

Gulf Coast Express (Expansion)

In-service date: 3Q 2026
Capacity: 0.5 Bcf/d

Source: Kinder Morgan

Gulf Coast Express Expansion - Kinder Morgan announced the start of an open season for the Gulf Coast Express expansion on May 16, 2022. The project entails adding compressors to the GCX pipeline to enhance its capacity from the Permian Basin to South Texas markets by 570 MMcf/d. The project is expected to be operational in May 2026, subject to additional customer agreements.

 

Hugh Brinson

In-service date: End of 2026
Capacity: 1.5 Bcf/d

Hugh Brinson - Formally known as Warrior.  The Hugh Brinson Pipeline is expected to be constructed in two phases with the first phase including the construction of approximately 400 miles of 42-inch pipeline with a capacity of 1.5 billion cubic feet per day (Bcf/d). It will extend from Waha to Maypearl, Texas located south of the Dallas/Ft. Worth Metroplex, where it will then connect to Energy Transfer’s vast pipeline and storage infrastructure. Phase I is expected to be in service by the end of 2026. As part of Phase I, Energy Transfer will also construct the Midland Lateral, which is expected to be a 42-mile, 36-inch lateral to connect Energy Transfer and third-party processing plants in Martin and Midland Counties to the Hugh Brinson Pipeline. Phase II of the project would include the addition of compression to increase the capacity of the new pipeline to approximately 2.2 Bcf/d. Depending on shipper demand, Phase II could be constructed concurrently with Phase I.

 

Other Projects

Saguaro Pipeline (2028 no FID) - The pipeline is proposed to run from the Waha Gas Hub in the Permian Basin in West Texas, U.S. to the Mexican border in Hudspeth County, Texas. The pipe would be 2.8 Bcf/d at 48" diameter, owned by ONEOK. This pipe's future depends on whether Mexico's Pacific LNG reaches FID (expected 2025). If this is built, the Permian has more of a chance to be overbuilt with takeaway pipe through 2030.

Northbound Pipeline Expansions

Natural Gas Pipeline of America (NGPL) - Added compression to increase northbound capacity by 50 MMcf/d. Planned in-service of October 2025.

Northern Natural Gas - Expansion of 87 MMcf/d. In-service by November 2025.

Transwestern - Expansion of 80 MMcf/d. In-service by November 2026.

 

Local Supply
Based on public operator guidance, midstream company outlooks, pricing trends, and recent drilling activity, we anticipate continued growth in both oil and gas production in the Permian Basin, albeit at a slower pace than in the past two years. Historically, Permian gas supply has closely followed available pipeline takeaway capacity, meaning gas is always waiting when infrastructure allows. However, the trajectory of future oil supply growth may be more measured, as operators exhibit greater capital discipline. This moderation in oil production could result in a flatter gas supply growth profile, even with rising gas-to-oil ratios (GOR) and increased drilling in lower-liquids areas.

 

Production

 

 

Operator Guidance
Coterra (Q4 2024 EC)
02/25/2025
2025 Guidance: CapEx: $2.1B - $2.4B. Total Production: 710 - 770 Mboe/d. Oil: 152 - 168 Mbo/d (47% YoY growth at midpoint). Natural Gas: 2.675 - 2.875 Bcf/d (flat YoY). Q1 2025 Production: 710 - 750 Mboe/d. Oil: 134 - 144 Mbo/d. Natural Gas: 2.85 - 3 Bcf/d.
Drilling & Basin Activity Permian Basin: Running 3 frac crews & 13 rigs (dropping to 10 later in 2025). Culberson County: Full-year simul-frac operations. 2025 Well Cost: $960/ft (-6% YoY). Recent Acquisitions: Franklin Mountain & Avant assets integrated, $50M in synergies. Anadarko Basin: Cost per foot reduced 18% YoY to $1,070/ft. 2025 plan includes first three-mile laterals. Marcellus Basin: Restarting two rigs in April. Cost per foot reduced to 800/ft (record-low). 2025 activity increase could add $50M in CapEx, depending on gas market strength. Key Basin Activity: Delaware Basin: 50%+ of capex, 14 rigs, 265 wells planned, focusing on multi-zone developments. Eagle Ford: JV dissolution with BPX, controlling 46,000 net acres, $2M+ savings per well expected Williston Basin: 3-rig program, integration of Grayson Mill assets, achieving $600K savings per well Anadarko Basin: Dow JV extended for 49 more wells, adding $40M in drilling carry.
Analysts Q&A Takeaways: Growth Capital Allocation: If gas holds at $4+ Henry Hub, expect further Marcellus investment. Returns, not growth, drive capital allocation between basins. Marcellus Strategy: Longer laterals reduce costs, improve efficiency. Upper Marcellus to play larger role in future drilling. Permian Expansion: Goal to reduce Lea County costs to Culberson levels. Frac design optimization driving lower costs, better recoveries. M&A Strategy: No intent to be a serial acquirer, but will remain opportunistic. Shareholder Returns vs. Deleveraging: $1B debt repayment priority, but buybacks will continue opportunistically.
Devon (Q4 2024 EC)
02/20/2025
2025 Production Guidance: Total production:815 MBOE/d. Oil production 383 MBbl/d. Natural gas production 1.3 Bcf/d
Drilling & Completion: 22 Active rigs (14 in Delaware, 3 in Williston, and others split among Eagle Ford, Anadarko, and Powder River). Fracturing Crews totaled 6 (3 in Delaware, 2-3 across other basins). Plans for about 265 wells in Delaware in 2025.
Key Basin Activity: Delaware Basin: 50%+ of capex, 14 rigs, 265 wells planned, focusing on multi-zone developments. Eagle Ford: JV dissolution with BPX, controlling 46,000 net acres, $2M+ savings per well expected Williston Basin: 3-rig program, integration of Grayson Mill assets, achieving $600K savings per well Anadarko Basin: Dow JV extended for 49 more wells, adding $40M in drilling carry.

 

Occidental Petroleum (Q4 2024 EC)
02/20/2025
Total production was 1.33 MMBOE/d in 2024, exceeding guidance. Record levels driven by Delaware, DJ, Midland, and Powder River Basin.
2025 Guidance & Capital Plans. Capex: $7.4 billion-$7.6 billion. Production Target: 1.42 MMBOE/d (includes full-year CrownRock impact). Oil Growth: Expecting ~3% oil volume increase. Permian Growth: Expected to grow 15 in 2025 (CrownRock: 170 MBbl/d, +5%). Midland Basin JV with Echo Petrol: Extended; 23 wells planned in 2025

 

Transwestern
Energy Transfer
12/31/2024
Transwestern Pipeline is seeking federal regulatory approval to add a compressor station in southeast New Mexico to increase pipeline capacity by 80,000 Dth/d for deliveries into North Texas.
The project is designed to be in service by Nov. 1, 2026, at a cost of nearly $52 million, according to the application (CP25-37) at the Federal Energy Regulatory Commission.
Transwestern intends to install the compressor on its 24-inch-diameter West Texas lateral, which stretches into New Mexico and connects with Transwestern’s mainline which provides transportation into several states in the Southwest and California. The facilities, dubbed the WT-0 compressor station project, would be used to enable deliveries on Transwestern’s Panhandle lateral, which extends from New Mexico into North Texas.

 

Devon 
11/06/2024
Devon Energy reported higher 3Q24 production volumes as they acquired Grayson Mill Energy in the Williston Basin and grew existing volumes.
Their total volumes lifted from 707 Mboe/d to 728 Mboe/d for the quarter, with 3 Mboe/d of that increase coming from Grayson Mill.
Devon guided for 4Q24 volumes of 811-830 Mboe/d, which features a full quarter with the new Grayson Mill assets that contribute 110 Mboe/d. Looking into 2025, Devon guided for average volumes of 800 Mboe/d, a net drop versus expected 4Q24 rates.
Operationally, the 2025 program will feature CapEx of $4.0-4.2 billion Due to efficiency gains, Devon was able to reduce drilling activity from 16 rigs to 15 rigs in 3Q24, and they will drop another rig in 1Q25 thanks to those gains.
At the current D&C pace, Devon intends to duplicate the 2024 16-rig output with a smaller 14-rig footprint in 2025.

 
Energy Transfer
11/06/2024
The company is expanding its NGL export capacity at the Nederland terminal, with the initial phase expected to be in service by mid-2025.
The company mentioned having massive storage and the ability to increase its storage in the DFW area as well as down around Houston.
The company mentioned having a big diameter pipe, especially if they can get Warrior to the finish line, which will bring a huge influx of Permian Basin supply.
International demand for ethane and LPG continues to grow rapidly, with an "insatiable demand" for LPG globally, particularly in China.

 

Rig Count

 

 

Local Demand
 
The Permian Basin is a supply zone with limited local demand relative to other areas in the US. Local gas demand can range from 400 MMcf/d and 700 MMcf/d depending on the season.
 

 
Power Market Influences

 

Wind and Solar Projects: The Permian Basin's sunny climate and high wind speeds make it an attractive location for renewable energy development. This increases competition in the power market and influences grid dynamics.
Infrastructure Limitations: Limited transmission capacity can bottleneck power flows from generation sites (e.g., gas plants or renewables) to demand centers.
Congestion Pricing: Transmission constraints often lead to price volatility and localized pricing spikes.
Market Design: The Permian Basin straddles the boundaries of the Electric Reliability Council of Texas (ERCOT) and the Southwest Power Pool (SPP), each with different market designs and rules that influence pricing and operations.
Environmental Regulations: Policies targeting emissions and flaring can shift market dynamics by incentivizing renewable energy or penalizing gas flaring.
Data Centers and Electrification: The rise of data centers and electrification of oilfield operations (e.g., electric drilling rigs) also adds to power demand.

 

 

 
Chart Packet
 

 

 

 

 

 

 

 

 

 

 

 

Recent Market-Relevant events

 

WhiteWater Announces FID on Traverse Pipeline
  • Market Impact: This pipe is important for moving gas toward the Houston and eventually, toward LNG in Louisiana. However, it does not add extra egress for those exposed to Waha gas prices.
  • WhiteWater, MPLX LP, and Enbridge Inc., have partnered with an affiliate of Targa to move forward with the construction of the Traverse Pipeline.
  • The Traverse Pipline will be a bi-directional, 160 mile, 36-inch pipeline along the Gulf Coast between Agua Dulce in South Texas and the Katy area.
  • The pipeline will transport up to 1.75 Bcf/d and will be sourced from multiple locations such as Whistler, Blackcomb, and Matterhorn Express Pipeline.

PR Newswire Link
Expansion of NGL and Natural Gas Takeaway From MPLX with Gulf Coast Projects
  • Market Impact: Added gas processing and pipeline expansions in the Permian will mean more gas reaching the Gulf to feed LNG growth through the end of the decade.
  • MPLX reported a significant uptick in its natural gas and NGL services in late 2024
  • New infrastructure includes the Gulf Coast fractionation complex, which will feature two 150 MBbl/d facilities, anticipated to come online by 2028 and 2029
  • The company is also working with ONEOK to build a 400 MBbl/d LPG export terminal and pipeline that is expected to come online in 2028
  • MPLX also mentioned that the Blackcomb and Rio Bravo Pipelines will enhance natural gas transport from the Permian to the Gulf Coast. The company is also boosting natural gas processing facilities, including the Secretariat processing plant in the Permian. The new facilities are expected to add 1.4 Bcf/d of processing capacity by late 2025.

MPLX Link

 

Blackfin Pipeline gets approval to build lateral connection to LNG
  • Market Impact: A connection between Blackfin and CP Express means Permian gas could flow down Matterhorn—another WhiteWater pipeline—to Blackfin, then to CP Express and CP2 LNG. This, along with Kinder Morgan’s FID-approved Trident Pipeline, would help debottleneck the Katy and Houston area and route gas around Houston to the Beaumont/Port Arthur area.
  • The Blackfin Pipeline, owned by WhiteWater Midstream, was approved by the RRC on Jan. 28 for the addition of two laterals, including a 0.55-mile, 48-inch CP Express Delivery Lateral.
  • The CP Express Pipeline will deliver gas from far southeast Texas to Venture Global's proposed CP2 LNG project in Cameron Parish, Louisiana.
  • The other approved lateral, called the Matterfin Lateral, is 0.2 miles long and would likely link to the Matterhorn Express Pipeline, allowing West Texas gas to connect more easily to Louisiana LNG.
  • Blackfin started construction on the mainline in October 2024, according to RRC data.

Blackfin Link

CP2 Express Link

 

Energy Transfer reaches FID on 2.2 Bcf/d Permian pipeline
  • Market impact: The addition of the Hugh Brinson pipeline in the winter of '26/'27 will likely add to the region's pipeline takeaway capacity overbuild. The Waha forward curve in 2027 reflects this reality. 
  • Previously known as the Warrior Pipeline. The pipe has been renamed to Hugh Brinson.
  • The project is a 400 miles of 42" pipeline with an initial capacity of 1.5 Bcf/d.
  • Phase II will boost pipeline capacity to 2.2 Bcf/d, depending on demand.

Source Link

 

 

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