Photo credit: Flickr/Britt Reints

Pioneer Natural Resources (NYSE:PXD) announced that it has a true Texas oil gusher on its hands. The well drilled horizontally into the Wolfcamp D interval of the Permian Basin had a 24-hour peak initial production rate of 3,605 barrels of oil equivalent per day, or BOE/d. The oil content of that well was 74% of its production. With an initial production rate of more than 1,000 BOE/d considered a really good well, Pioneer Natural Resources appears to have a real gusher on its hands.

What's really exciting for other producers in the play is that this Pioneer well wasn't just an outlier. The company also announced that it placed a well drilled into the Wolfcamp B interval into production, which was also a gusher. This well produced a 24-hour peak initial production rate of 2,801 BOE/d. That production was very oily as well at 75% of production. Finally, one of Pioneer's Upper Wolfcamp B interval wells achieved a 24-hour initial production rate of 3,176 BOE/d. This one was the best of the three in terms of oil content, which has 83% of the production.

Clearly, Pioneer Natural Resources has something special in the Permian Basin. CEO Scott Sheffield noted that these results, "demonstrate the substantial oil resource potential" across all of Pioneer's acreage positions. It also suggests that large Permian Basin acreage holders like LINN Energy (OTC:LINE.Q), Devon Energy (NYSE:DVN), and Concho Resources (NYSE:CXO) could also be sitting on future gushers.

On LINN Energy's last earnings conference call, management specifically noted that it's sitting on a lot of potential in the Permian Basin. The only question is what the company plans to do with its acreage. In the near term, it is participating in four non-operated horizontal Wolfcamp wells that are currently drilling, and plans to drill its first operated horizontal well by early next year. But longer term LINN could look to joint-venture or monetize its position to unlock its value sooner. In looking at Pioneer's results, LINN Energy could be sitting on a lot of value in the Permian.

The same can be said for Devon Energy (NYSE:DVN). Last quarter the Permian Basin helped to drive 38% growth in its U.S. oil production. Overall, Devon has 8,000 potential drilling locations throughout the Permian, with about 10% of those locations in the Midland-Wolfcamp areas. The Permian Basin is an important part of Devon's plan to transition more of its production to higher-margin oil. 

The last company to pay close attention to is Concho Resources (NYSE:CXO). After selling its Williston Basin position to LINN Energy in 2011 it became a pure play in the Permian Basin. It is a decision that has paid off as Concho grew its oil production by 19% over last year. But it sees a lot more growth ahead.

Concho just announced the launch of an accelerated growth plan that is expected to double its production by 2016. The company sees average annualized growth rates of about 25%. Given what it has seen in the Permian, as well as recent results from Pioneer, this bold goal looks achievable.

While the Bakken gets a lot of credit for leading America's oil boom, Texas' Permian Basin could be the area that drives the next phase of that boom. That could mean big returns for investors.

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