Page 11 - NorthAmOil Week 44 2021

NorthAmOil COMMENTARY NorthAmOil

Shale drillers report higher

profits, boost dividends

US US shale producers are reporting stronger prof- barrels per day (bpd), flat to slightly below
its as commodity prices stay at multi-year highs. third-quarter output from continuing oper-
However, unlike previous booms in oil and gas ations. And its production guidance for the
prices, when producers tended to ramp up capi- Permian Basin is 472,000-482,000 barrels of
tal expenditures, this time most are keeping their oil equivalent per day, below the third quarter’s
spending reined in. And some are raising their 499,000 boepd.
dividends instead. Newly formed Coterra Energy – a combina-
Among those shale producers beating analyst tion of Cabot Oil & Gas and Cimarex Energy –
expectations with their profits were Diamond- talked up its commitment to capital discipline
back Energy, Occidental Petroleum, Pioneer during its first ever earnings call. The company
Natural Resources, Marathon Oil, Callon Petro- combines oil assets in the Permian with gas oper-
leum and APA – the parent company of Apache. ations in the Appalachian Basin. This is despite
In some cases, the improvements were signifi- the fact that the company is poised to exit 2021 Drillers remain
cant. For example, Occidental’s third-quarter net with oil rates that are up 30% year on year.
income of $628mn marked an increase from a Meanwhile, Chesapeake Energy said it was committed
loss of $97mn in the second quarter and a loss raising its 2021 oil production forecast by 1mn
of $3.8bn a year ago. Diamondback, meanwhile, barrels, to 24.5-26.5mn barrels. The uptick was to restraint,
saw its profit rise to $649mn from a loss of $1.1bn attributed largely to lower base production
a year ago. declines. However, next year the company antic- but given
While some producers are looking at cau- ipates producing 20-22mn barrels. technological and
tiously raising production as a result of improved Both Chesapeake and Devon Energy said
oil and gas prices, it appears that the industry they had been able to raise production without other advances,
need not be concerned about a surge in output increasing spending – Devon’s third-quarter out-
so dramatic that it could cause another dramatic put came in 5% above guidance. This illustrates output can rise
price downturn anytime soon. Many produc- how drillers remain committed to restraint, but
ers reiterated their commitment to restrained given technological and other advances, output anyway.
spending and drilling. can rise anyway.
For example, Diamondback said it was com- Producers continue to focus on paying
mitted to maintaining its fourth-quarter Per- down debt and returning cash to shareholders
mian Basin production over the course of 2022. via share buybacks and dividends. Occidental,
The company also lowered its capex guidance which was left with high debt levels following
for 2021 for the second time this year, to $1.49- its acquisition of Anadarko Petroleum in 2019,
1.53bn, down 10% from April forecasts. said it had repaid $4.3bn worth of long-term
Occidental, meanwhile, said its fourth-quar- debt in the third quarter, bringing its total debt
ter oil and gas production would be 1.13-1.16mn down to $30.92bn.™

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