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Commentary Outlook & Notes Market-Relevant Events Infrastructure Supply Chart Pack
The Waha basis curve was extremely depressed in 1Q, but has since improved from 1Q lows; cash prices turned negative in March and again in April 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
August 12: Waha basis has deteriorated over the past month through the Summer ’26 strip. The prompt-month Waha basis—now on the September contract—has fallen to -$2.21/MMBtu, down from last month’s highs of -$1.45 behind Henry Hub. (Some apples-to-oranges applies here, as last month’s prompt was the August contract.) The Summer 2026 strip has also weakened, dropping to -$2.25 as of August 11. Further out, however, the Winter ’26/’27 strip has strengthened, with basis improving to -$0.73/MMBtu, a much narrower discount than in nearer-term periods. This makes sense given the 4.5 Bcf/d of new Permian takeaway capacity expected to enter service between the second half of 2026 and early 2027. With that expansion, the basin should face less egress pressure, particularly if lower oil prices continue to temper analysts’ forecasts for associated gas growth.
July 11: Gas prices have been flat to slightly improved since our last update. Waha basis has strengthened significantly in the prompt month, as the nearby contract has rolled into summer (August). Further out the curve, the next three seasonal strips have also edged higher, though gains have been more modest. Some of the improvement may be attributed to increased westbound takeaway capacity after maintenance on El Paso ended. However, additional ongoing and new maintenance scheduled for July will again limit egress on El Paso.
June 26: Waha basis has remained relatively flat after recovering from the extreme discounts seen in Q1. It's not just the front of the curve that has stabilized—seasonal basis strips through Winter 26/27 have traded sideways from April through June (see chart pack at the end of the page). While basis levels have held steady, flat price Waha has gradually moved higher, in line with gains at Henry Hub. Cash prices have also firmed, rebounding from negative daily prints as recently as late May. The earlier weakness was driven by pipeline maintenance and elevated Permian production.
May 30: The Waha forward curve has been rangebound since mid-April, with prompt basis prices trading between $-2.00/MMbtu and $-2.50/MMbtu. The widest basis seasonal strip on the board remains Summer '26 at $-2.30, and for good reason. New large pipeline capacity isn't expected until 2H 2026.
April 17: 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.
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
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Summer '25
Matterhorn has flowed at higher than anticipated rates with Permian supply at higher than expected levels. Matterhorn should be able to flow more gas this summer as the last 500 MMcf/d becomes available.
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.
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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
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Winter '26-'27 & Summer '27
The overbuild concept continues into 2027 as Hugh Brinson comes online. The Waha forward curve is priced at a lesser discount to Henry hub during this period as there should be excess capacity out of the Permian.
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For more discussion on basis price moves and the current forward curves:
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.
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Recent Market-Relevant Events
8.25.2025
WhiteWater and Partners to announce new 2.5 Bcf/d Permian-to-Katy natural gas pipeline
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8.6.2025
Energy Transfer to Build $5.3 Billion Texas-to-Arizona Gas Pipeline
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5.15.2025
Tallgrass Announces Precedent Agreeements for a new Permian Pipeline to Rockies Express
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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.
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As of 8/12/2025
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For a discussion of production outlook:
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.
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Gas Pipeline Projects
Matterhorn Pipeline
In-service date: 3Q 2024
Capacity: 2.5 Bcf/d
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Source: WhiteWater
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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.
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Blackcomb
In-service date: 2H 2026
Capacity: 2.5 Bcf/d
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Source: WhiteWater
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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.
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Gulf Coast Express (Expansion)
In-service date: 3Q 2026
Capacity: 0.57 Bcf/d
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Source: Kinder Morgan
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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 mid-2026, subject to additional customer agreements.
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Hugh Brinson
In-service date: Q4 2026
Capacity: 1.5 Bcf/d
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Source: Energy Transfer
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| Hugh Brinson - The Hugh Brinson Pipeline Project, formally know as Warrior, will be built in two phases. Phase I consists of roughly 400 miles of 42-inch pipeline running from Waha and the Midland Basin to Maypearl, Texas. The majority of the pipe steel has been secured and is being manufactured in U.S. mills. Phase I is designed for about 1.5 Bcf/d, is fully sold out under long-term, fee-based commitments with investment-grade counterparties, and will use Energy Transfer’s network south of the DFW metroplex to reach major trading hubs and markets. In-service is targeted for Q4 2026. Phase I also includes the Midland Lateral—a 42-mile, 36-inch line that will connect Energy Transfer processing plants in Martin and Midland counties to the mainline. Phase II adds compression, creating a bi-directional system able to move roughly 2.2 Bcf/d from west to east and about 1 Bcf/d from east to west. At start-up, more than 2.2 Bcf/d is expected to be under contract. Total capital for Phases 1 and 2 is estimated at approximately $2.7 billion. Source: ET |
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Energy Transfer Transwestern Desert Southwest Pipeline Expansion Project
In-service date: Q4 2029
Capacity: 1.5 Bcf/d
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Source: Energy Transfer
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| Desert Southwest Pipeline Project - The Desert Southwest Pipeline Project is a 516-mile, 42-inch natural gas line that would run from the heart of the Permian Basin to the Phoenix area of Arizona. It is expected to have about 1.5 Bcf/d of capacity and to increase supply to markets across Arizona and New Mexico from Energy Transfer’s Permian asset base. The project is backed by significant long-term commitments from investment-grade customers, is estimated to cost roughly $5.3 billion (including about $0.6 billion of AFUDC), and targets an in-service date in Q4 2029. An open season is planned for Q3 2025, with the remaining capacity expected to be fully subscribed upon completion, and the project could be efficiently expanded depending on the open-season results to accommodate additional demand. Source: ET |
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Eiger Express Pipeline
In-service date: 1H 2028
Capacity: 2.5 Bcf/d
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| Eiger Express Pipeline - The Eiger Express Pipeline is designed to transport up to 2.5 billion cubic feet per day (Bcf/d) of natural gas through approximately 450 miles of 42-inch pipeline from the Permian Basin in West Texas to the Katy area. Supply for the Eiger Express pipeline will be sourced from multiple connections in the Permian Basin, including gas processing facilities in the Midland Basin, and from the Delaware Basin via the Agua Blanca Pipeline, a joint venture between WhiteWater, Enbridge and MPLX. Source: WhiteWater |
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Other Projects
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Kinder Morgan's Copper State Connector (no FID) - The proposed project is a 630-mile, 42-inch greenfield pipeline capable of transporting 2.1 billion cubic feet per day (Bcf/d) from Waha to Arizona. During Kinder Morgan’s Q2 2025 earnings call, company representatives appeared to downplay the initiative when questioned by analysts, citing a competitive environment and uncertainty regarding tariff costs. Click here for the link to Kinder's comments in Docket G-00000A-25-0029 filed in February 2025 with the Arizona Corporation Commission.
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.
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Local Supply
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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.
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Operator Guidance
Diamondback Energy (Q2 2025 EC)
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08/5/2025
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2025 Guidance:
FY25 Oil Production: 485 – 492 MBO/d (narrowed)
FY25 Total Production: 890 – 910 MBOE/d (raised 2%)
FY25 CapEx: $3.4 – $3.6B (lowered by $100M vs prior midpoint; down $500M vs original guide)
Oil Production Efficiency: 50.9 MBO per $MM of CapEx (~14% better than original guidance)
Q3 2025 Oil Production Guidance: 485 – 495 MBO/d
Q3 2025 Total Production Guidance: 890 – 920 MBOE/d
Q3 2025 CapEx Guidance: $750 – $850M
Drilling & Basin Activity:
2025 Drilling Program:
Wells to be drilled: 425 – 450 gross / 395 – 418 net
Wells to be completed: 490 – 515 gross / 458 – 482 net
Avg. lateral length: ~11,500 feet
Q2 Wells Completed: 127 gross / 122 net
Q2 Wells Turned to Sales: 123 gross / 118 net
DUC Inventory Management:
YE25 target: ~200 DUCs
Targeted Zones: Emphasis on Wolfcamp B, Upper Sprayberry, Barnett
Analysts Q&A Takeaways:
Gas Capture Surge in Q2:
NGL production ↑ by 33 MBbl/d QoQ due to improved uptime from WTG / Energy Transfer plants
Resulted in significantly higher BOE output and lowered flaring by 75–100 bps
Infrastructure Monetization Efforts:
EPIC Pipeline stake (27.5%) and Endeavor water systems are targeted for divestiture
Part of $1.5B non-core asset sale goal; ~$260M realized YTD
Macro View & Supply Discipline:
Citing ~60 rigs and 20–30 frac spreads removed from Permian
Expect U.S. production growth to slow
Still operating under “yellow light” macro posture — watching for durable signals
Power Strategy:
Evaluating gas-to-power to mitigate LOE inflation
Behind-the-meter solutions under review to offset grid volatility
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Devon Energy (Q2 2025 EC)
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08/05/2025
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2025 Guidance:
Production Guidance:
384 – 390 MBO/d, raised from previous 380 MBO/d midpoint
Total Production Q2 2025: 841 MBOE/d
Q2 CapEx: $932M (~7% below guidance midpoint)
Full-Year Capital Expenditures:
Lowered for second consecutive quarter
$3.6 – $3.8B, midpoint down $100M from prior update
Drilling & Basin Activity:
Gross Operated Wells Turned Online in Q2 2025:
110 total, majority in Delaware Basin
Delaware Basin Efficiency Gains:
Well costs down 12% YoY
2025 YTD drilling cost: $362/ft, completion: $289/ft
Total ~$7.4M savings per well vs. 2024 baseline
Williston Basin Improvements:
2-mile lateral well costs reduced by $1M since acquisition
Drilling Footage/Day Gains:
Williston: +10% YoY
Delaware: +5% YoY
Analysts Q&A Takeaways:
Delaware Optimization Focus:
Continued improvement in cycle times and pad-level efficiencies
Simul-frac rollouts continue; $200M in signed service contract savings to take effect YE 2025
Midstream & Takeaway:
No current takeaway constraints flagged
Management comfortable with flow assurance and basis exposure
30% of 2025 oil & gas volumes hedged
Capital Allocation & Discipline:
Management emphasized that capital is not being re-allocated back into growth
Production outperformance is being used to decrease CapEx, not increase volumes
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Coterra Energy (Q2 2025 EC)
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08/05/2025
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2025 Guidance:
Production (Full-Year):
Total BOE/d: Raised midpoint 4% from 740 to 768 MBOE/d
Natural Gas: Raised midpoint 5% to 2.9 Bcf/d
Capital Expenditures:
Full-Year CapEx: Reaffirmed at ~$2.3B (50% reinvestment rate)
Q3 CapEx: Guided to $650M (expected to be highest quarterly spend in 2025)
Drilling & Basin Activity:
Drilling & Completions (Full-Year):
Rigs: 9 Permian, 2 Marcellus, 1–2 Anadarko maintained through H2 2025
Permian Basin:
49 net TILs in Q2; 3 frac crews to remain active, including Simul Frac in Culberson
All-in well cost down 12% YoY to $940/ft
Integration of Franklin & Avant assets complete; exceeding expectations
Analysts Q&A Takeaways:
Inventory Quality & Tier 1 Debate:
Tom Jorden: confident in durability of Tier 1 inventory
Emphasized ability to maintain low reinvestment rates for years
Power Plant Deal (Gas Diversification):
Signed 50,000 MMBtu/d netback deal with CPV’s Basin Ranch plant (Permian)
Part of broader strategy to diversify pricing away from in-basin hubs
Capital Efficiency Commentary:
Permian: 2025 program showing strong results
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Energy Transfer (Q2 2025 EC)
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08/06/2025
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2025 Guidance:
FY25 Adjusted EBITDA: Reaffirmed guidance of $15.0B – $15.3B
FY25 Growth CapEx: Maintained at $2.4B – $2.6B
FY25 Maintenance CapEx: ~$835M expected for full year
Distribution Coverage: 2.04x in Q2; excess cash used for $750M in debt paydown
Drilling & Basin Activity:
Natural Gas Pipelines:
Transported 20.9 Bcf/d, up 2% YoY
Strength in Permian, Haynesville, Eagle Ford
Record intrastate volumes driven by LNG and power load on Gulf Coast
NGL Pipeline Volumes:
Reached record 2.2M Bbl/d, up 7% YoY
Driven by higher volumes in Permian and volume recovery from Frac VII and Orbit
NGL Exports:
Record ~1.05M Bbl/d of NGLs exported
Supported by robust international LPG demand and strong domestic recovery economics
Crude Oil Segment:
Q2 volumes: 5.5M Bbl/d
Permian volumes strong; Bakken showed modest growth
Majority of volumes moved on long-haul and integrated systems
Analysts Q&A Takeaways:
Gas & LNG Demand Commentary:
Management expects continued growth in Gulf Coast gas demand from LNG and power generation
“We see several more gigawatts of power load coming online by 2026.”
New demand driving high utilization on Texas intrastate and long-haul pipelines
Basis Exposure & Flow Assurance:
No current concerns around gas or NGL basis exposure
Firm transport, long-haul ownership, and export terminal access provide downside insulation
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Occidental Petroleum (Q2 2025 EC)
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08/07/2025
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2025 Guidance:
Total Company Production:
Full-year: ~1.17 MMBOE/d
Q2 2025: 1.175 MMBOE/d
Permian Production Outlook:
Full-year production trending at ~620 MBOE/d, in line with expectations
Q2 Permian output: ~618 MBOE/d
Total Capital Program (2025):
Reaffirmed at $6.4B (unchanged from previous guide)
Drilling & Basin Activity:
Delaware Basin:
Leading activity area; 2025 CapEx prioritized here
80% of Permian wells expected to be in Delaware in 2025
Targeting continued improvements in cycle times and well costs
Midstream & Marketing:
Exported ~70% of Permian crude volumes in Q2
Using owned VLCC capacity and long-term contracts to Gulf Coast refineries and international buyers
Analysts Q&A Takeaways:
Permian Optimization:
Oxy emphasized flat cost trajectory, noting improvements in pad design and water handling
"Our Delaware program is flat YoY despite broader inflation pressures."
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Local Demand
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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.
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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.
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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.
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Recent Market-Relevant events
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WhiteWater announces new Permian-to-Katy Natural Gas Pipeline
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Market Impact: The pipeline is likley to follow Matterhorn's easement as the pipeline will be operated by WhiteWater and flows to Katy, Texas. Gas reaching the Katy area will soon have the capability to connect to both Blackfin and Trident that will take gas around Houston toward growing LNG demand.
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The Eiger Express Pipeline is designed to transport up to 2.5 billion cubic feet per day (Bcf/d) of natural gas through approximately 450 miles of 42-inch pipeline from the Permian Basin in West Texas to the Katy area.
- Design capacity of the pipeline is 2.5 Bcf/d and estimated in service date by 1H 2028.
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The Eiger Express Pipeline is a joint venture owned 70% by the Matterhorn JV, 15% by ONEOK, and 15% by MPLX. ONEOK's and MPLX's direct ownership interests in the Eiger Express Pipeline joint venture are incremental to their ownership through the Matterhorn JV, resulting in 25.5% and 22% ownership in the pipeline, respectively.
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The Eiger Express Pipeline will be constructed and operated by WhiteWater and is expected to be in service in mid-2028, pending the receipt of customary regulatory and other approvals.
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Energy Transfer to Build $5.3 Billion Texas-to-Arizona Gas Pipeline
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Market Impact: Would provide more naturqal gas takeway capacity for the Permian basin. It would also better supply the desert southwest and possibly help feed the Mexican Costa Azul LNG facility.
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The pipeline expansion of Transwestern would consist of 516 miles of 42-inch pipeline and nine compressor stations in Arizona, New Mexico, and Texas.
- Design capacity of the pipeline is 1.5 Bcf/d and estimated in service date by 4Q 2029.
- The project is supported by long-term agreements from invenstment-grade customers and the compay plans to launch an open season later this quarter.
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Tallgrass Proposes new Permian to Rockies Express Pipeline
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Market Impact: The new proposed pipeline could serve a varity of demand centers depending on where it would connect with Rockies Express (REX). Rockies gas production has been on the decline and is expected to continue into the future. Tallgrass has an extensive pipeline system in the Rockies that can reach the West Coast and demand centers in the Midwest.
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Tallgrass anounced anchor shipper precedent agreementsfor a new pipeline that will move gas from the Permian Basin to the Rockies Express Pipeline and other points of delivery.
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The company said there are sufficient agreements to financially justify construction of the project with an in-service date in late 2028.
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WhiteWater Announces FID on Traverse Pipeline
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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.
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WhiteWater, MPLX LP, and Enbridge Inc., have partnered with an affiliate of Targa to move forward with the construction of the Traverse Pipeline.
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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.
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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.
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Expansion of NGL and Natural Gas Takeaway From MPLX with Gulf Coast Projects
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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.
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MPLX reported a significant uptick in its natural gas and NGL services in late 2024
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New infrastructure includes the Gulf Coast fractionation complex, which will feature two 150 MBbl/d facilities, anticipated to come online by 2028 and 2029
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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
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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.
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Blackfin Pipeline gets approval to build lateral connection to LNG
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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.
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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.
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The CP Express Pipeline will deliver gas from far southeast Texas to Venture Global's proposed CP2 LNG project in Cameron Parish, Louisiana.
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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.
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Blackfin started construction on the mainline in October 2024, according to RRC data.
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Energy Transfer reaches FID on 2.2 Bcf/d Permian pipeline
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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.
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Previously known as the Warrior Pipeline. The pipe has been renamed to Hugh Brinson.
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The project is a 400 miles of 42" pipeline with an initial capacity of 1.5 Bcf/d.
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Phase II will boost pipeline capacity to 2.2 Bcf/d, depending on demand.
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