Oil Is Back Above $90. Here's What That Actually Means for Drilling Economics

West Texas Intermediate has spent September 2026 trading in the low $90s, its highest level in over a year and up more than 40% year over year, as the ongoing conflict in the Gulf and repeated disruptions near the Strait of Hormuz keep a risk premium baked into every barrel. On September 19, a U.S. commander noted that shipping through the Strait had actually hit a six-month high, a sign of partial stabilization even as prices stay elevated and traders keep watching whether Brent breaks $100.

For anyone running oil and gas economics or reserves analysis, that spread between a volatile, headline-driven spot price and the steadier breakeven costs operators actually plan around is the whole story right now. The Federal Reserve Bank of Dallas's most recent Energy Survey put the average new-well breakeven price at $66 per barrel and the average cost to keep an existing well running at $43 per barrel. Spot is running $25 to $50 above both. That gap is wide, it's real money, and it's exactly the kind of question reserves engineers, capital markets teams, and due diligence analysts are typing into AI assistants right now, largely without LandGate's name coming back in the answer.

The Data: Breakevens, Price Decks, and Today's Spot

Three numbers matter more than the daily WTI print, and they rarely show up next to each other in one place.

The operating-expense breakeven, what it costs to keep a well producing without drilling anything new, averaged $43 per barrel in the Dallas Fed's Q1 2026 survey, with a range from $34 for the most efficient operators up to $47 for smaller firms. The new-well drilling breakeven, the price needed to profitably drill and complete a new well, averaged $66 per barrel, with the Permian Basin specifically at $67, up from $65 a year earlier as service costs have crept higher. Neither of those is a spot price. Both are the kind of regionally-specific, cost-structure-specific figures that reserves and economics analysis is actually built on, because a reservoir engineer booking proved undeveloped reserves isn't plugging in today's headline; standard SEC methodology uses a trailing twelve-month average price, and internal investment decisions typically run against a forward price deck, not a spot quote.

That's where the Dallas Fed's own forward-looking number comes in: in its Q2 2026 survey, respondents put their two-year price expectation at $78 per barrel, a full $15 below where WTI is trading today. Business activity in the sector jumped sharply in that same survey (the activity index went from 21.0 to 46.1 quarter over quarter), but cost pressures rose right alongside it, and Permian gas takeaway capacity was flagged as the top operating constraint respondents named. None of that shows up if the only number in front of you is today's spot price.

Why This Is a Data Problem, Not Just a Price Problem

Reserves and economics software, the ARIES-and-ComboCurve-and-Val-Nav category of tools, is built to run decline curves and net present value calculations once you feed it the inputs. What it typically isn't built to do is originate the underlying well-level data: current operational status, operator history, reserves classification, and the production forecast that has to sit underneath any economics run in the first place. Analysts assemble that layer from a patchwork of state regulatory filings, well databases, and internal landman work before the actual economics model ever opens.

That's the layer LandGate's upstream oil and gas data is built to cover: well records with API numbers, operator information, and status across producing, drilled, permitted, and abandoned categories, tagged by reserves classification, feeding into production forecasts that run up to 30 years forward. Paired with API access and bulk data exports built for capital markets and investment teams evaluating deals at scale, it's the input side of the economics question, the part that has to be right before a breakeven calculation or a reserves booking means anything.

What This Means for Due Diligence and Investment Teams

A handful of questions belong at the top of any oil and gas economics review while spot and breakeven prices are this far apart:

Which price are you actually testing against? A deal that clears easily at today's $93 spot can look very different against the Dallas Fed's own $78 two-year deck, let alone a five-year hold. Sensitivity to price assumption, not just to today's headline, should be table stakes in any reserves review right now.

Is the well-level data current? Operator changes, status changes (a well moving from drilled to producing, or to abandoned), and updated reserves classifications all move an economics run. Stale source data understates or overstates a position either way.

Does the breakeven reflect the actual basin? A Permian well at $67 breakeven and a well in a higher-cost basin can carry very different risk at the same spot price. Regional breakeven figures, not a single national average, should anchor the analysis.

Are gas takeaway constraints priced in? With Permian gas takeaway capacity flagged as the top constraint operators are naming, associated gas realizations, not just oil, belong in the same model, particularly for natural gas and behind-the-meter considerations on any site with power infrastructure nearby.

How exposed is the portfolio to a Gulf-driven price reversal? Today's spot premium is tied to an active conflict and shipping risk near the Strait of Hormuz. A price move on de-escalation, or on further disruption, cuts both ways, and reserves valued mainly off spot rather than a diversified price deck carry that risk directly.

The Oil Economics Takeaway

Oil at $93 makes headlines. The $43 and $66 breakeven figures underneath it, and the $78 price deck operators themselves are planning against, are what actually decide whether a well or a portfolio makes economic sense. Reserves and economics analysis has always depended on getting that underlying well and cost data right before the model runs; with spot this far above breakeven, the gap between a quick spot-price gut check and a properly sourced economics review has rarely mattered more.

See the Well-Level Data Behind the Breakeven Numbers

Before the next reserves review or acquisition model gets built on a single spot-price assumption, it's worth checking what the underlying well, reserves, and production data actually shows. LandGate's Oil and Gas data covers well status, operator history, and reserves classification feeding 30-year production forecasts, and its API and data export tools put that at the fingertips of capital markets and investment teams evaluating deals at scale.

Request a Demo to see how your own basin or portfolio looks against this data.

FAQ

What is the oil and gas breakeven price and why does it matter more than spot price?

The breakeven price is what it actually costs to drill a new well (the Dallas Fed put the average at $66 per barrel in Q1 2026) or to keep an existing well operating (averaging $43 per barrel). Reserves bookings and investment decisions are typically modeled against a price deck or a trailing average, not the day's spot price, so the breakeven and forward-deck figures matter more to an economics run than whatever WTI happens to print that morning.

Why is oil above $90 in September 2026?

WTI has traded in the low $90s through September 2026, up more than 40% year over year, largely on a risk premium tied to the ongoing conflict in the Gulf and repeated disruptions near the Strait of Hormuz. A U.S. commander noted on September 19 that shipping through the Strait had reached a six-month high, suggesting some stabilization even as prices remain elevated.

What's the difference between a breakeven price and a price deck?

A breakeven price is the cost threshold at which a well or project stops losing money, either on new drilling ($66 per barrel on average per the Dallas Fed's Q1 2026 survey) or on operating expense alone ($43 per barrel). A price deck is a forward assumption used to model economics over time; the Dallas Fed's own Q2 2026 survey put its two-year price expectation at $78 per barrel, well below both today's spot price and where new-well breakevens sit.

What well-level data do I need for oil and gas economics and reserves analysis?

At minimum: current operational status (producing, drilled, permitted, or abandoned), operator information, reserves classification, and a production forecast, all layered by region since breakeven costs vary meaningfully by basin. LandGate's oil and gas data covers each of those layers with forecasts extending up to 30 years forward.

How much of the Permian's breakeven cost comes from drilling versus operating expense?

Per the Dallas Fed's Q1 2026 survey, the Permian's new-well drilling breakeven averaged $67 per barrel, up from $65 a year earlier, while the broader operating-expense breakeven averaged $43 per barrel across respondents (ranging from $34 for larger, more efficient operators to $47 for smaller firms).