Shale Breakevens by Basin: the Dallas Fed Survey
The three shale breakeven definitions, new-well, operating and corporate, with Dallas Fed Q1 2026 survey figures for the Permian, Delaware and Eagle Ford.
Educational analysis for professional use. This guide is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
Three Numbers, All Called “Breakeven”
When a shale executive says the company breaks even at $45 WTI (the US benchmark crude price) and a survey says new wells don’t pay below $66, neither is lying. They are answering different questions. Mixing the answers is probably the most common analytical error in the sector, and it produces conclusions that are wrong by $20/bbl or more.
There are three distinct breakeven concepts:
- New-well breakeven (survey): the WTI price an operator needs to profitably drill a new well. Drilling and completion (D&C) capex is the dominant cost.
- Operating breakeven (survey): the price needed to cover operating expenses on a well that already exists. The drilling capital is sunk and excluded.
- Corporate breakeven (company-stated): the price at which company-wide cash flow funds sustaining capital and, usually, the dividend. Each company writes its own definition.
What each includes:
| Cost component | New-well | Operating (existing) | Corporate |
|---|---|---|---|
| D&C capex | Yes | No (sunk) | Sustaining portion only |
| Lease operating expense | Yes | Yes | Yes |
| Corporate G&A | Respondent’s judgement | Rarely | Yes |
| Dividends | No | No | Usually (varies by company) |
None of the three covers the cost of buying the acreage in the first place, so none of them is a full-cycle return on everything an operator has sunk into a basin.
A corporate breakeven of $45 is not “better” than a survey new-well breakeven of $66. The corporate figure excludes growth drilling entirely; the survey figure is the cost of one incremental well. They measure different layers of the business.
The Dallas Fed Q1 2026 Survey
The Dallas Fed Energy Survey is the cleanest public source for the first two definitions. It asks executives at E&P (exploration and production) firms what WTI price they need to profitably drill a new well, and what price covers operating expenses on existing wells. The Q1 2026 results (March 2026 survey):
| Measure | Q1 2026 | Q1 2025 |
|---|---|---|
| New-well breakeven, all respondents | $66/bbl | $65/bbl |
| Operating breakeven, existing wells, all respondents | $43/bbl | $41/bbl |
Both moved up roughly $1-2/bbl year on year. Cost inflation in the shale patch is slow but persistent.
By play, the new-well numbers (Q1 2026):
| Play | New-well breakeven |
|---|---|
| Permian (all responses) | $67/bbl |
| Permian (Delaware) | $63/bbl |
| Eagle Ford | $63/bbl |
The Permian operating breakeven for existing wells was $39/bbl, below the $43 all-respondents average. One oddity is worth reading correctly. The Permian’s headline new-well figure ($67) sits above the all-respondents average ($66), while its Delaware sub-basin sits below it at $63. A play average blends the best rock with a long tail of smaller operators on secondary acreage, so the spread inside the Permian is wider than the gap between the Permian and the Eagle Ford.
Size matters more than basin
The survey’s most useful split isn’t geological. Large E&Ps (10,000 b/d or more) reported a new-well breakeven of $59/bbl; small E&Ps (under 10,000 b/d) reported $68. That $9 gap reflects scale in service contracts, longer laterals, and better acreage, and it’s wider than the gap between most plays. When someone quotes “the” shale breakeven, ask whose: at $63 oil the large-cap half of the survey still drills, and the rest is under water.
Why the $23 Gap Between New-Well and Operating Matters
Existing shale production doesn’t shut in until prices fall a long way. At $43/bbl the average respondent still covers operating costs on producing wells, so a price drop from $80 to $60 halts almost no current output.
What it halts is drilling. And because shale wells lose most of their output within the first two to three years, shale supply is a treadmill: continuous new drilling just to hold production flat. The capex burden that creates is covered in decline curve analysis, but the consequence for breakevens is simple. The new-well number, not the operating number, is what governs supply over any horizon beyond about a year. When WTI sits between $43 and $66, existing wells keep pumping while the rig count quietly falls, and the production response shows up two to four quarters later.
Corporate Breakevens: Three Company Examples
Company-stated breakevens answer a shareholder’s question, not a driller’s: at what oil price does the business fund itself and pay me? Three disclosures, each defined differently:
| Company | Stated breakeven | Definition | As of |
|---|---|---|---|
| Canadian Natural (CNQ) | Low-to-mid US$40s WTI | Adjusted funds flow covers maintenance capital plus dividends | March 2026 |
| Cenovus (CVE) | US$45/bbl WTI | Sustaining capital plus base dividend | Reaffirmed May 2026 |
| Devon (DVN) | ~$45/bbl WTI | ”Breakeven funding level” | May 2025 investor deck |
The definitions are not interchangeable even within the corporate category. CNQ’s figure includes its full dividend; Cenovus counts only the base dividend. A company that excludes the dividend altogether would print a lower number for the identical business.
Devon’s ~$45 comes from a May 2025 investor presentation and has not been restated since, not in the FY2025 10-K and not in the February 2026 earnings release, and the business it described roughly doubled when the all-stock Coterra merger closed in May 2026. A breakeven that survives in slide decks but stops appearing in filings is a number management has stopped standing behind. Stale corporate breakevens are common because these figures are marketing artefacts: companies refresh them when costs fall and let them age when costs rise.
Note too that CNQ and Cenovus are oil sands producers, not shale operators. Their low corporate breakevens partly reflect near-zero base decline on mining assets, which keeps sustaining capital low per barrel. Comparing them against a shale new-well survey conflates two definitions and two asset types at once.
Read-Through at Planning Prices
We run producer economics at $70/bbl WTI as the planning deck. Against the Dallas Fed new-well breakeven of $66/bbl, the all-respondents average clears with modest headroom; operating breakevens at $43/bbl clear easily. Large E&Ps at a $59 new-well breakeven still earn an $11/bbl margin on incremental drilling. Small operators at $68 are down to $2/bbl, effectively breakeven on new wells at our planning deck. The corporate breakevens near $45 sit $25/bbl below the deck, and sustaining capital and the dividend are already inside that $45, so the whole $25 is spare. That is why Cenovus frames its net-debt target at $45 oil rather than $70.
The rig line to cut first is the small operator already near $68.
New-well, operating and corporate breakevens answer different questions. The primer sets those numbers against a reserve NAV.
The Excel model is the primer's reserve-based NAV live across 15 sheets: change the oil price, decline rate or discount rate and the valuation moves.
Frequently Asked Questions
- What is the shale breakeven price by basin in 2026?
- The Dallas Fed Energy Survey (Q1 2026, March survey) puts the average WTI price needed to profitably drill a new well at $66/bbl across all respondents. By play: Permian $67, Permian (Delaware) $63, Eagle Ford $63. Covering operating expenses on existing wells requires far less: $43/bbl on average, $39 in the Permian.
- What is the difference between new-well and operating breakevens?
- A new-well breakeven includes drilling and completion capex, so it answers whether drilling the next well pays. An operating breakeven covers only the cash costs of running a well that already exists; the drilling capital is sunk. In Q1 2026 the gap was $23/bbl ($66 new-well vs $43 operating), which is why existing shale production keeps flowing at prices that would halt new drilling.
- Why do company-stated corporate breakevens differ from the Dallas Fed survey?
- Corporate breakevens measure whether company-wide cash flow covers sustaining capital and, usually, the dividend. They include corporate G&A and shareholder obligations but exclude growth drilling, and each company defines its own version: Canadian Natural states low-to-mid US$40s WTI (adjusted funds flow covering maintenance capital plus dividends), Cenovus US$45 (sustaining capital plus base dividend). Neither is comparable to a survey's single-well drilling economics.