November 14, 2019
US shale operators are on track to grow 2019 oil production by around 16% over 2018 thanks to impressive operational execution so far this year, according to Rystad Energy.
The earnings season revealed that shale companies increased oil output by around 2% on average in the third quarter of 2019 whilst cutting the mid-point guidance for yearly drilling and completion (D&C) expenditures.
Rystad Energy, the independent energy research and consulting firm headquartered in Norway with offices across the globe, forecasts that US shale operators will continue their expansion in the final three months of the year, growing oil production by at least 1.3% on a quarterly basis in the fourth quarter of 2019.
“The actual results so far this year reaffirm our optimistic expectations for the remainder of the year. US shale companies are well-positioned to see an oil increase of about 9% in the fourth quarter this year relative to the same period last year, growing 2019 volumes by approximately 16% over 2018,” says Veronika Akulinitseva, vice president on Rystad Energy’s shale team.
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Early guidance for 2020 indicates that capital expenditure budgets will be softer, although a number of large independent operators have come out with robust capital programs for next year.
“We expect continued reductions in capital expenditure and a renewed focus on cash flow next year. However, this does not imply a reduction in oil output. We are still likely to see another year of oil production expansion in US shale – although at a slower pace than seen this year,” Akulinitseva added.
Rystad Energy analyzed the third quarter 2019 earnings results of around 40 US shale operators. On average, companies decreased their 2019 capital guidance by 0.6% in the third quarter, compared to a reduction of 0.4% registered in the previous quarters. So far in 2019, companies decreased D&C guidance by around 1% relative to their original capital budgets communicated at the beginning of the year.
“With three reporting quarters of 2019 behind us, we can conclude that a number of US producers showed impressive execution this year and continued to increase oil production guidance throughout the year, while remaining at the lower end of capital guidance. Permian players and companies active in multiple plays were especially successful in outperforming their original estimates,” Akulinitseva remarked.
Notes: Company abbreviations and names used in chart:
APA: Apache; BCEI: Bonanza Creek Energy; CDEV: Centennial Resource Development; CHK: Chesapeake; CLR: Continental Resources; CPE: Callon Petroleum; CVX: Chevron; CXO: Concho Resources; DVN: Devon Energy; ECA: Encana; EOG: EOG Resources; ERF: Enerplus Corporation; FANG: Diamondback Energy; HES: Hess; HPR: HighPoint Resources; JAG: Jagged Peak Energy; LPI: Laredo Petroleum; MRO: Marathon Oil; MTDR: Matador Resources; MUR: Murphy Oil; NBL: Noble Energy; OAS: Oasis Petroleum; OXY: Occidental Petroleum; PDCE: PDC Energy; PE: Parsley Energy; QEP: QEP Resources; ROSE: Rosehill Resources; SM: SM Energy; SRCI: SRC Energy; WLL: Whiting Petroleum; WPX: WPX Energy; XEC: Cimarex Energy; XOG: Extraction Oil & Gas
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About Rystad Energy
Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry. Our products and services cover energy fundamentals and the global and regional upstream, oilfield services and renewable energy industries, tailored to analysts, managers and executives alike. Rystad Energy is headquartered in Oslo, Norway with offices in London, New York, Houston, Aberdeen, Stavanger, Moscow, Rio de Janeiro, Singapore, Bangalore, Tokyo, Sydney and Dubai.