US Oil Production Will Now Grow at Half The Rate
In the new year, US oil production will grow at half the rate it did last year. This forecast was announced by EOG Resources.
U.S. oil production rose 900,000 barrels per day in 2023, EOG President Billy Helms said in a presentation to investors. “Given the high volume of production last year, you will have to compensate for a sharper decline in 2024,” the head of the company said. “This suggests that U.S. manufacturing will not be able to continue to grow at the same rate as in 2023.”
In the previous year, drillers from the Permian Basin in West Texas to the Bakken formation in North Dakota raised oil production much higher than forecast. Output rose to record levels while OPEC+ put the brakes on supplies to stem falling prices.
Helms noted that EOG expects to report oil production growth of about 3% in 2023 when it reports fourth-quarter earnings in the coming weeks. The company does not see a need to increase activity in its core regions this year, but may expand drilling in its developing Utika shale plays located in Ohio, West Virginia and Pennsylvania, Helms said.
The unexpected jump in U.S. production last year was partly due to expansion by private producers. They account for about half of the US drilling rigs and up to 40% of the country’s onshore production, according to Barclays.
By the way, Bloomberg previously called the growth in American shale production over the year from 12.5 million barrels to 13.3 million barrels per day “amazing.” It is “surprising” because the number of drilling rigs in 2023 decreased by 20%. The agency sees the reasons for this paradoxical situation in the active implementation of innovations by American shale producers.
But U.S. shale operators are expected to significantly cut spending on U.S. drilling next year, Bloomberg reports. Private oil and gas companies will cut their budgets by an average of 4% to $34.4 billion in 2024, according to Barclays PLC’s annual global spending survey. The cuts, the biggest ever forecast by a North American company, come after shale drillers increased spending by 15% last year.
After higher-than-expected production in 2023, the US shale industry is now slowing as reserves at leading drilling sites dwindle. Overall spending by North American manufacturers is projected to decline 1% next year. This comes after budgets expanded more than expected this year, Barclays analysts wrote.
The basis for Barclays’ assessment was Evercore ISI’s expense survey released earlier this month. It forecasts a 2% increase in US oil companies’ budgets next year. At the same time, oil production is likely to increase in 2024 by 150 thousand barrels per day.
