Creative drilling could make oil more profitable in the Powder River Basin
BUFFALO — With ongoing technological innovation, oil drilling could eventually be a more profitable enterprise in the Powder River Basin, analysts say.
As it stands, the northeast Wyoming oil play is not as productive as other major basins, said Ryan Hill, principal analyst at Enverus. Relative to other major oil basins, such as the Anadarko (Oklahoma/ Texas), Williston (North Dakota), Permian (west Texas/eastern New Mexico), Bakken formation (North Dakota) and Eagle Ford (south Texas), the Powder River Basin is “pretty early on” in terms of development, he said.
There are far fewer rigs in the Powder River Basin – eight as of Nov. 14, including just one in Johnson County – than in other places, Hill said in an interview.
“The economics haven’t been as good compared to the major basins,” he said. “It’s a bit of a chicken and egg situation, where if you have a basin like Eagle Ford or Bakken where you have excess of 30 to 40 rigs, it’s easier to get your costs down, because you have scale and you have a lot of oil field services companies that can provide you with a better deal if you have a bigger program.”
The chicken and egg analogy refers to a situation in which two events are interdependent, but it’s unclear which came first. For the Powder River Basin, the idea is that there has been more investment in other oil-rich areas, which means it is less cost effective for operators to drill in the play.
Still, Enverus Intelligence Research, which publishes reports on the energy industry, highlighted the Powder River Basin, as well as the Anadarko and Williston basins and the fact that operators in these basins in particular are able to break even at lower oil prices as they implement longer laterals, in a recent report.
A lateral refers to a well’s horizontal reach.
On average, operators in the Powder River Basin have broken even at around $60 to $65 a barrel in the basin. Three-mile laterals bring that average down closer to $55.
“Coming down the cost curve, (breakeven prices) are going to make it even more competitive for these multi-basin operators to say, ‘Hey, I actually want to put some more capital in the Powder,’” Hill said. “It’s something that Devon (Energy) has definitely mentioned on their quarterlies, that they think they’re figuring things out. And, from our perspective, we would tend to agree that they’re pulling the levers they should be pulling.”
Hill said that as operators increase their drilling capacity from two miles to three or, in some cases, even four miles, they save upwards of 15% to 20% per foot.
“We think operators could drop their breakevens by somewhere between $5 to maybe $8 in the Powder, based on what we’ve seen so far,” he said.
Creative drilling, as Enverus calls it, will be necessary as high-quality oil inventory is drilled in major oil basins. That means four-mile laterals, horseshoe wells and J wells.
“Getting creative to get longer lateral length and drop your costs is what operators need to lean into more, pretty much in every basin, and definitely the Powder needs it, I’d argue, more than most,” Hill said.
A barrel of crude oil that costs less than $50 per barrel to produce is considered a key profitability metric. Larger operators have shown a less-than-$50 breakeven price in the Niobrara formation. Still, most of the Niobrara and Mowry formations are higher on the cost curve, Hill said.
“Costs are always a challenge because if you have revenues, you have cost,” Hill said. “That’s why it’s a bit of chicken and egg. When you get more activity, you tend to get better pricing.”
The cost to produce a barrel of oil in the Powder River Basin is higher than in other oil-rich areas. Hill said that water costs in Wyoming are high, and fracking requires a lot of water.
EOG Resources operates in the Powder River Basin, and the company dropped its water costs by 95% by building out its own water infrastructure, Hill said.
“Reusing a lot of that recycled water rather than having to buy it on the market is a significant cost savings,” he said.
Crude oil prices are $58 per barrel as of Friday, according to Business Insider. Oil prices are declining as supply outstrips demand, Hill said.
The Wyoming Consensus Revenue Estimating Group, or CREG, report issued earlier this year, predicted the ongoing oil price volatility.
Enverus is projecting that oil prices “are not going to be very strong in 2026,” Hill said.
“Which is going to be a headwind to every oil basin,” he said. “... We expect the back half of ’26 to be stronger and extend that oil strength through the end of the decade. That supply-demand imbalance should be easing its way out by mid-2026.”
This story was published on Dec. 4, 2025.