Page 9 - NorthAmOil Week 11 2021

NorthAmOil PERFORMANCE NorthAmOil

US rig counts down but

production bouncing back

US THE US’ active rig count edged down by one last Drilling Productivity Report, which forecasts
week, according to oilfield services firm Baker short-term production trends in the major shale
Hughes. This marked the first time the US rig plays, and its Short-Term Energy Outlook. The
count had fallen since November. agency is forecasting that oil and gas production
The small change does not necessarily indi- from the US’ seven leading shale plays will fall by
cate a reversal of the overall upward trend over 46,000 barrels per day (bpd) and 316mn cubic
recent months, but does show that US drillers are feet (8.9mn cubic metres) per day respectively
continuing to proceed with caution. in April compared to March. However, it antic-
In the week up to March 12, the oil-focused ipates that both oil and gas output will increase
rig count in the US dropped to 309 from 310 the slightly in the Permian Basin, to 4.29mn bpd and
previous week, while the gas rig count stayed flat 17.04bn cubic feet (482.6mn) per day respec-
at 92 for a total of 402 active rigs in the country. tively, with gas production also projected to
While rig counts have been recovering over the rise in the Haynesville shale, to 12.13 bcf (343.2
past four months, they are still at less than half mcm) per day.
the levels seen a year ago, when the total was Separately, the EIA estimated in its Short-
reported at 792. Term Energy Outlook that while US crude pro-
More than half of the country’s active rigs are duction had fallen to an average of 10.4mn bpd
located in the Permian Basin – 212 in total in the in February, mainly from the impact of freezing
week up to March 12, of which 211 are oil-focused. temperatures, it would rise to almost 11mn bpd
These figures have been released around in March. The agency expects US oil output to
the same time as the US Energy Information average 11.1mn bpd over the course of 2021, and
Administration (EIA) has issued updates to its 12.0mn bpd in 2022.™

PROJECTS & COMPANIES

EOG emphasises cautious approach,

top-performing wells

US US independent EOG Resources has sought to saying recently. Several shale executives had a
reassure investors that it would only return to similar message at the CERAWeek by IHS Markit
growth mode once oil markets are balanced – conference, held virtually earlier this month, for
potentially in 2022. example. ConocoPhillips’ CEO, Ryan Lance,
“We’re not going to be forcing oil in an noted at that event that most shale producers had
oversupplied unbalanced market. So we will said they would not grow in 2021, adding that he
adapt our growth rate based on what we see hoped there was discipline in the system. This
in 2022 happening from a market condition,” was echoed by Hess’ CEO, John Hess, who said
EOG’s chairman and CEO, Bill Thomas, said he did not expect short-cycle barrels to weigh on
during a virtual event held by Evercore ISI the market this time like they did before.
this week. “So, we may end up growing 2% In EOG’s case, it anticipates keeping output
or 3% or 5% or whatever. We see 8-10% when roughly flat compared with 2020, at around
we model the company – inside the company 440,000 barrels per day (bpd). The company’s
we see 8-10% is the optimal speed for EOG to strategy for 2021 includes increasing returns,
grow,” he added. with a focus on wells that average returns of 60%
“We may not grow at all,” Thomas said. “We or more at oil prices of $40 per barrel – what
may grow at a smaller rate than the 8-10% out- EOG describes as “double premium” wells.
look that we’d given. But we’re going to be mar- Such wells also have a lower cost and lower
ket-driven and not price-driven, and make sure decline rate compared to previous wells drilled
that we don’t put oil into the market that doesn’t by the company. EOG has been steadily ramp-
need oil.” ing up the number of premium and double pre-
Thomas’ comments are in line with what mium wells it drills, and this will once again be a
numerous major shale producers have been focus for this year.™

Week 11 18•March•2021 www. NEWSBASE .com P9