Oil Price
Record Permian production and increased efficiency across the shale patch have prompted many U.S. oil producers to raise their output guidace, which could boost American production above the expectations of limited gains for this year.
Last week, the supermajors reported record oil and natural gas output from the top shale basin, the Permian. They also spoke of their plans to raise that output even further. Meanwhile, independents are boosting their own guidance after seeing higher volumes and lower cycle times to bring wells online.
Exxon and Chevron said on Friday that their respective output in the Permian basin jumped in the second quarter—and this was not only due to the recently completed acquisitions by the two supermajors.
Exxon said it achieved record production in Guyana and heritage Permian for total upstream net production, which rose by 15%, or 574,000 oil-equivalent barrels per day, from the first quarter. ‘Heritage Permian’ is not counting the volumes from Pioneer Natural Resources, which began contributing to production and earnings in May.
The record output helped Exxon beat analyst estimates with the second-highest earnings for the second quarter in a decade.
For the full year, Exxon sees production, including eight months from Pioneer, at around 4.3 million barrels of oil equivalent per day, with total Permian production expected at 1.2 million boepd.
Chevron, though missing Wall Street estimates, also reported record-high Permian production and higher total output after the integration of PDC Energy.
CEO Mike Wirth said on the earnings call that “the drivers of that are improved performance across multiple dimensions of the business.”
Triple frac drilling is delivering cost reductions of more than 10% and shortening completion times by 25% where applied, Wirth noted.
The Permian is “exceeding expectations for this year. We’ve raised our full-year guidance, and we’ve got great confidence in what we’ll deliver in 2025,” the executive added.
It’s not only the supermajors that are optimistic about U.S. oil production.
EOG Resources updated its full-year guidance to reflect higher volumes and lower per-unit cash operating costs, after better-than-guidance midpoints in volumes and per-unit operating costs for the second quarter. The company raised the top end of the 2024 guidance range for U.S. crude oil production to 491,800 bpd from 490,000 bpd.
EOG Resources expects U.S. crude oil production growth to be between 300,000 bpd and 400,000 bpd annually this year, with close to 500,000 bpd in total liquids, EOG Resources chairman and CEO Ezra Yacob said on the earnings call.
Coterra Energy, for its part, raised its full-year 2024 BOE production guidance by 1% and oil production guidance by 2.4% from the guidance provided in May, thanks to “faster cycle times and strong well performance.”
Coterra Energy increased 2024 oil production guidance to 105,500 bpd to 108,500 bpd, up by 2.4% at the mid-point versus prior guidance, while it kept the incurred capital expenditures guidance of $1.75 billion-$1.95 billion.
Matador Resources increased its full-year 2024 guidance range for oil production, following substantial cost savings and record production results with oil output of 95,488 bpd, which was 3% better than company expectations in the second quarter.
Civitas Resources said last week that third quarter total volumes and oil are anticipated to be higher than the second quarter, with increases expected in both the Permian Basin and DJ Basin.
Sure, U.S. oil production will grow at a much slower pace than in the past two years, but efficiency in drilling is driving output even as the number of active rigs is falling.
Most forecasts see growth in U.S. crude oil output at fewer than 500,000 barrels per day (bpd) this year.
But if producers hit the higher targeted production volumes that they have announced this earnings season, OPEC+ will have to – once again – contend with higher-than-expected production from non-OPEC+ producers. This could upset the OPEC+ group’s plans to begin adding supply to the market as early as October.
By Tsvetana Paraskova for Oilprice.com
