Working Capital in the Permian Basin

Doing business next to a big oil field

The Permian Basin is a large sedimentary basin in West Texas and far-southeastern New Mexico. It is the highest-producing oil field in the US, averaging 4.2 million barrels of crude oil a day in 2019. Its component basins include the Midland Basin, the largest, the Delaware Basin, the second largest, and the Marfa Basin, the smallest.

We group nineteen counties under this page, among them Midland, Ector, Reeves, Howard, Pecos, Ward and Winkler. That is an editorial grouping from public regional definitions, not an official state region. Not every business in those counties works for an oil company, but many of them sell to someone who does, or to someone's employees.

Three layers of customer, three payment speeds

1. Operators and large service companies. Orders can be large, but payment terms are set by their accounts-payable cycle, not by your payroll date.
2. Smaller service and supply businesses. Hauling, welding, pipe, parts, water, safety equipment. They get paid by the layer above them and pay crews, vendors and fuel in real time.
3. Local retail and services. Restaurants, repair shops, housing-related trades and stores depend on the spending of the first two layers.

A slowdown in activity at the top reaches the bottom a few weeks later. A payment delay at the top does too. That lag is why owners often see the squeeze after the cause has already passed.

Costs that do not follow activity

Field-facing businesses carry heavy fixed costs: leased or financed equipment, insurance, yard space, trained crews that are expensive to lose. When work slows, a truck sits but its note does not pause. When work spikes, owners have to buy parts, add shifts and staff up before the first invoice is even approved. In both directions, cash runs ahead of revenue or behind it, and working capital is the bridge across the gap.

Our separate page on oilfield slowdowns takes the downside case in more detail. This page is about the everyday version: the week-to-week timing gap that exists whether the field is busy or not.

An illustrative example

Consider an invented water-hauling operator that bills $48,000 a month on net-60 terms, with $38,000 a month in fuel, driver pay, insurance and truck payments. In month one it has paid out the full $38,000 and collected nothing. By the time the first invoice clears, it has spent roughly two months of costs, about $76,000, without a dollar of customer cash in between. These are round numbers for illustration, not our terms, and not a prediction of what any business would need.

If you are weighing an amount

We fund $25,000 to $5,000,000, funding can arrive in as little as 24 hours, and the application takes about five minutes with a soft credit pull. Sole proprietors can apply. You can start your application.