Through 2026, Texas has kept filing permits at a steady clip across its major basins, even as commodity prices bounce around. That consistency tells its own story about where operators still see opportunity.
This article breaks down what permits actually are, what the Texas Railroad Commission's (RRC) recent numbers show, how Rule 37 factors into approvals, and what any of this means if you're evaluating oil and gas investment opportunities.
Key Takeaways
- A drilling permit is regulatory approval, not a promise a well gets drilled
- The RRC processed 693 original permits in July 2026 alone, per its latest release
- Rule 37 governs well-spacing exceptions and can delay or shape permit approval
- Accredited investors can gain exposure to Texas development through structures like PetroVybe's direct participation model
What Are Texas Drilling Permits?
A Texas drilling permit is an application filed with the RRC (Form W-1) requesting authorization to drill at a specific location. No permit, no legal drilling activity.
The process works like this:
- Operator files a W-1 application through the RRC's online system, including a location plat
- RRC reviews the application against spacing, safety, and lease-line rules
- The commission issues or denies the permit
According to the RRC's own permit form, a standard permit expires two years from the date of issuance, and that period cannot be extended.
Some sources cite a one-year window. That figure refers to a separate plugging deadline under Statewide Rule 14(b)(2) for dry or noncommercial wells—not general permit validity.
Permits fall into distinct categories:
- New Drill – a fresh wellbore
- Recompletion – working an existing wellbore into a new field or deepening it
- Re-entry – returning to a wellbore previously plugged to the surface
- Field Transfer – moving a well's designation from one field to another
- Reclassification – changing a well’s regulatory classification
- Injection/Disposal – authorization to operate a well for injection or disposal rather than production
Do I Need a Permit to Drill a Well in Texas?
Yes. Under the RRC's plat requirements tied to Statewide Rule 5(h), operators must secure approval before drilling activity begins, and a full-lease plat is required for the first well an operator drills on a given lease.
Can You Still Drill for Oil in Texas?
Absolutely. Texas remains the top oil-producing state in the country, supplying more than two-fifths of all US crude production in 2024, according to the EIA's Texas state analysis. Permitting activity across 2026 confirms that development hasn't slowed.
Recent Texas Drilling Permit Activity in 2026
The RRC's most recent monthly release, covering July 2026 and published August 6, 2026, shows continued but slightly moderating activity.
July 2026 original permits: 693 total, broken down as:
- 612 new oil/gas wells
- 58 recompletions
- 11 re-entries
- 9 field transfers
- 3 reclassifications
By well type, July permits included:
- 103 oil
- 54 gas
- 497 oil-and-gas combination
- 29 injection
- 10 other
Completion reports processed the same month showed 982 oil, 545 gas, and 249 injection filings, reflecting the broader pipeline behind the permit count.
For context, RRC's monthly permit statistics show May came in at 753 permits and June at 750, so July's 693 represents a modest pullback rather than a trend reversal.
Where the Activity Is Concentrated
New oil and gas well permits and completions by district, July 2026:
| District | New Permits | Oil Completions | Gas Completions |
|---|---|---|---|
| District 8, Midland | 275 | 360 | 72 |
| District 1, San Antonio | 76 | 19 | 34 |
| District 7C, San Angelo | 70 | 91 | 0 |
| District 2, Refugio | 45 | 22 | 29 |
| District 6, East Texas | 44 | 6 | 22 |
| District 8A, Lubbock | 37 | 10 | 0 |
| District 3, Southeast Texas | 23 | 11 | 5 |
| District 9, North Texas | 20 | 12 | 8 |
| District 4, Deep South Texas | 8 | 2 | 11 |
| District 7B, West Central Texas | 6 | 4 | 0 |
| District 10, Panhandle | 5 | 3 | 1 |
| District 5, East Central Texas | 3 | 1 | 7 |
Midland dominates by raw volume, no surprise given the Permian's scale. But San Antonio, Refugio, and East Texas districts, closer to South Texas and the Gulf Coast Basin, show meaningful gas-focused activity too. That's the neighborhood where operators are increasingly chasing natural gas rather than just crude.
Permits, Leases, and Drilling: Understanding the Difference
These three terms get used interchangeably. They shouldn't be.
- A mineral lease grants the legal right to drill on a piece of land. It's a prerequisite, separate from the permit itself.
- A permit gives an operator the option to drill at a location. It's not an obligation. Plenty of permitted locations never see a rig.
- A drilled but uncompleted (DUC) well sits in between: drilled, but not yet fracked or hooked up to production.
The EIA has tracked DUC inventory as a useful pipeline indicator. As of its most recent detailed estimate, roughly 6,521 DUCs existed across major US shale basins, with nearly 40% in the Permian Basin spanning West Texas and eastern New Mexico, according to EIA's DUC estimate report.
Most DUCs get completed within a year of drilling, though timing shifts with commodity prices.
Permit-to-drilling timelines still vary widely. Infrastructure, commodity prices, and an operator's capital allocation all factor in—so a permit filed today might not see a rig for eighteen months, or ever.
Rule 37 and Regulatory Considerations
Rule 37 is the RRC's Statewide Spacing Rule. It governs exceptions to well-spacing and density requirements, and it comes up often in developed fields or on irregularly shaped leases.
Operators typically need a Rule 37 exception when:
- Lease boundaries are irregular, making standard spacing impossible
- Infill drilling is planned in an already-developed field
- A well's bottom-hole location falls closer to a lease line or another well than standard spacing allows
RRC guidance on lease-line exceptions notes that spacing determinations differ by well geometry. Vertical wells use surface location, directional wells use bottom-hole location (BHL), and horizontal wells use the relevant correlative interval.
The process turns procedural quickly. Plats must identify offset operators, lessees, or unleased mineral owners nearby. Operators can resolve exceptions by:
- Serving as their own offset
- Securing waivers from affected parties
- Providing 21-day notice to affected parties
- Publishing notice for four consecutive weeks when parties can't be located
For mineral owners tracking nearby activity, a Rule 37 hearing near your acreage is worth watching. It often signals infill development is coming.
What Is Rule 37 in Texas Oil and Gas?
Rule 37 lets operators drill closer to lease lines or other wells than standard spacing allows. The RRC reviews each exception and requires notice to offset parties, which is why these filings show up most in developed fields and on irregular tracts.
Why Permit Activity Matters for Investors
Rising permit counts in a basin are a leading indicator. They show where operators are actually committing capital, not just where they're talking about it.
The Dallas Fed's Q1 2026 Energy Survey backs this up: the business-activity index jumped from -6.2 to 21.0, and firms that had drilled recently reported a capital-expenditures index of 21.0, with nearly 42% increasing spending.
By Q2, that activity index climbed further to 46.1, according to the Dallas Fed's June 2026 energy survey release. Firms need roughly $66–67 per barrel WTI to profitably drill new wells in the Permian, which puts current permit activity into useful economic context.
But permit counts alone don't tell you whether a project is well-run. That's where evaluation discipline matters more than raw filing volume.
PetroVybe's development approach in South Texas and the Gulf Coast Basin combines two things:
- Protecting existing production through workovers and optimization on roughly 400 acquired legacy wells
- Pursuing new drilling on 57+ planned wells, guided by rigorous prospect evaluation
Chief Geophysicist Michael Stamatedes brings a 48-year track record from ExxonMobil and a career-wide 75.2% hit rate on profitable location selection, well above the industry's sub-40% average. That figure is career-spanning, not a PetroVybe-specific project statistic, but it reflects the caliber of evaluation behind development decisions.
For accredited investors interested in natural gas development, direct participation structures like PetroVybe ONE offer exposure to this kind of asset-backed development. Key tax features include:
- Intangible drilling costs typically represent 60–80% of invested capital in new-drilling projects
- IDC deductions can offset active income, including W-2 earnings and capital gains—not just passive income
- PetroVybe reported a 94% deduction against active income in 2025 for its partners
Frequently Asked Questions
What are drilling permits in Texas?
A drilling permit is Railroad Commission of Texas (RRC) approval to drill at a specific location. It's distinct from a mineral lease, which grants the underlying right, and from actual drilling, which may or may not follow.
Do I need a permit to drill a well in Texas?
Yes. Operators must secure RRC approval, including required plats under Statewide Rule 5, before any drilling activity begins on a lease.
Can you still drill for oil in Texas?
Yes. Texas remains the leading US oil-producing state, supplying over two-fifths of national crude output, with active permitting continuing across multiple basins through 2026.
What is Rule 37 in Texas oil and gas?
Rule 37 is the statewide well-spacing exception rule. It applies when operators need to drill closer to lease lines or other wells than standard spacing allows, often in developed fields.
How long is a Texas drilling permit valid?
A standard RRC drilling permit is valid for two years from the date of issuance and cannot be extended, per the RRC's own permit form.
How can I track drilling permit activity near my property or investment area?
The RRC's public Drilling Permit (W-1) Query tool and Public GIS Viewer let anyone search permits and well records by location. Monthly RRC statistics releases also provide statewide and district-level summaries.
