Multiple U.S. shale producers boost 2024 oil and gas production forecasts following unexpected Permian success

(Bloomberg) – Some leading U.S. 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 production forecasts Thursday, with the latter saying it is seeing stronger-than-expected well performance in the Permian basin, North America’s busiest oil and gas field, where five producers over the past week reported results that surprised to the upside. Ovintiv Inc. and Matador Resources Co. made similar recent production announcements.

While the increases are from just a handful of publicly-traded companies so far, the trend raises the prospect that U.S. shale producers are ramping up production more aggressively than expected, posing a threat to efforts by OPEC+ to manage global prices.

OPEC and its allies are set to stick with their plan to revive oil production 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 bpd are due to be added from OPEC+ over the course of the fourth quarter.

The combination of more oil from the U.S. and OPEC+ could lead to an oversupplied market and lower prices if global consumption does not increase as well. In the U.S., 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 production revival could begin around the time U.S. voters cast their ballots.

EOG Resources raised the high end of its production forecast to 491,800 bpd from 490,000 bbl. Coterra Energy increased its full year oil production forecast to 105,500 to 108,500 bpd, up 2.4% from its previous projection while maintaining how much money it expects to spend.

In addition, Exxon Mobil Corp. and Chevron Corp. on Friday reported record Permian production in the second quarter and are on track to grow Permian output by 10% and 15% this year, respectively.

To be sure, EOG Chief Executive Officer Ezra Yacob told analysts Friday he maintains his view that U.S. oil supply will likely grow by 300,000 to 400,000 bpd this year compared with 2024. Total liquids growth in 2024 will likely be 500,000 bpd, Yacob said.

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 Holdings LLC. Improved efficiencies are allowing U.S. producers to hike production while keeping spending relatively flat, allowing firms to return more cash to investors.