Where is the best place to buy a practice? Is it in an established, populated area, where markets and economics may shift and people might leave? Consider how much an area might change in 20 years as children grow up, leave home, and their parents downsize their homes. Will new families move in? Or will they look to newer developments as tastes and populations shift?
Is it on the edge of an urban area, where there is room for expansion, but also for a building boom to turn to bust? Think back to when the housing bubble burst 10 years ago. Remember those streets full of empty, new houses?
But what about buying a practice in an area where science is forecasting major economic growth in the coming decades?
And what about in the Permian Basin?
What you might not know is that those last two are one and the same. The Permian Basin is a geological area under a big part of west Texas, including Midland, Odessa, and Lubbock. While you may recognize those names as oil towns, what you might not know is that the Permian Basin is poised to become the largest oil patch in the world. And with that comes the opportunity for incredible growth, if you get in on it early enough. So if you’re thinking about buying a dental practice, Midland, TX, might just be the place.
What’s Happening in the Permian Basin
A recent article on Bloomberg reported that oil output in the basin was set to hit 3.18 million barrels a day in May of this year. That’s the highest the basin has ever produced since the Energy Information Administration began tracking the data. What’s more, that number is expected to only go up, with an estimation that the region may be producing as much as 4 million barrels a day by the year 2023. For reference, the Ghawar field in Saudi Arabia, currently the largest oil field in the world, has a capacity to produce 5.8 million barrels a day. Other top OPEC producers such as Iran and Iraq each produce less than 5 million barrels a day (Iran reportedly hit 3.81 millions barrels a day in March).
According to Rob Thummel, a managing director at Tortoise, a multi-billion dollar energy asset investment management company, “The basin in and of itself could end up being the largest oil field in the world, even bigger than Ghawar in Saudi Arabia . . . If the Permian was part of OPEC, it would be the fourth-largest OPEC member, right behind Saudi Arabia, Iran and Iraq,” and, “[b]y the end of the year, the Permian probably overtakes Iran.”
What Does this Have to Do with Buying a Dental Practice? Midland, TX, and Other Permian Basin Oil Towns are Going to Grow
In any industry, production depends on infrastructure. In the oil business, that infrastructure means pipeline capacity. Presently, the region lacks sufficient pipeline capacity to get the oil out of the area and to the market. Bloomberg reports that “rampant production growth has already strained available pipeline capacity to transport the oil to market, pressuring prices” some of which have dropped to a three-year low. Oil companies are working together to increase pipeline capacity, with a major project recently announced that will increase pipeline capacity by 700,000 barrels a day by the end of 2019.
Growth in the oil industry, including pipeline construction, means jobs. Jobs means families moving to the area, and families need dentists. This news about the oil field capacity can mean a major economic and population change to the area that will last potentially for decades. It’s a growth market for the oil industry and oil industry workers, but it’s also a potential growth market for industries and services that people rely on in their day to day lives. This is why it’s a good time to consider buying a dental practice, Midland, TX, or in nearby areas. Relatedly, if you have an established practice and are thinking about retiring, it’s also a good time to put a dental practice for sale. Midland, TX, and other Permian Basin towns are all set to grow over the next several years.
If you’re asking yourself, “why would I want to practice in Midland, TX?” you might want to take a look at our recent article about the benefits of buying a practice or seeking an associateship in areas outside of major metropolitan areas. While the Midland-Odessa area isn’t exactly a small town (there are just under 300,000 people within the Midland-Odessa metropolitan area), it’s certainly not like Houston or the DFW area, and encompasses a number of smaller communities that would be well served by a quality dental practice. Also, depending on how and where you are considering practicing, it could be a great place to look at purchasing or joining a practice with a pediatric specialty (see our recent post about that).
At DDSmatch Southwest, our team has members who work exclusively in Texas and know both the dentistry business and the region. Whether you are considering buying a dental practice, Midland, TX, or other areas in the Permian Basin, or if you are considering selling your practice, adding an associate, or joining as an associate, we can help you get the results you want. Give us a call today to find out what we can do for you.