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(Bloomberg) — Some leading US shale producers are planning to pump more oil this year than originally projected, a sign national supply could exceed the modest growth expectations many companies had pledged.
EOG Resources Inc., one of the largest independent shale producers, Coterra Energy Inc. and Civitas Resources Inc. increased their 2024 forecasts Thursday, with the latter saying it is seeing stronger-than-expected well performance in the Permian Basin, North America’s busiest oil field where five producers over the past week reported results that surprised to the upside. Ovintiv Inc. and Matador Resources Co. made similar recent output announcements.
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While the increases are from just a handful of publicly-traded companies so far, the trend raises the prospect that US shale producers are ramping up output more aggressively than expected, posing a threat to efforts by the Organization of Petroleum Exporting Countries to manage global prices.
OPEC and its allies are set to stick with their plan to revive oil output next quarter. Starting in October, OPEC+ has agreed to gradually begin restoring output that was halted in late 2022 in hopes of elevating prices. About 540,000 barrels a day are due to be added from OPEC+ over the course of the fourth quarter.
The combination of more oil from the US and OPEC+ could lead to an oversupplied market and lower prices if global consumption does not increase as well. In the US, oil prices tend to receive more attention in presidential election years when gasoline pump prices are a simple economic gauge for voters. And the OPEC output revival could begin around the time US voters cast their ballots.
EOG Resources raised the high end of its production forecast to 491,800 barrels of crude and condensates per day from 490,000 barrels. Coterra Energy increased its full year oil production forecast to 105,500 to 108,500 barrels, up 2.4% from its previous projection while maintaining how much money it expects to spend.
In addition, Exxon Mobil Corp. and Chevron Corp. said last quarter they’re on track to grow Permian production by 10% this year. The two energy giants report earnings early Friday.
At the same time, drilling rigs in the Permian are down 2% this year, hovering at the lowest level of activity in more than two years, according to Baker Hughes. Improved efficiencies are allowing US producers to hike output while keeping spending relatively flat, allowing firms to return more cash to investors.
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