Page 4 - NorthAmOil Week 44 2022

NorthAmOil COMMENTARY NorthAmOil

Major shale producers starting to

see signs of Permian slowdown

Certain leading shale producers in the Permian Basin are starting to see a slowdown in

productivity and volume gains, according to recent results

PERMIAN BASIN A slowdown could be starting to materialise in production regions in recent years, has low-
the prolific Permian Basin, based on recent com- ered its Permian output guidance for this year
WHAT: ments from major shale producers as they unveil to around 20% compared with 2021, from 25%
Some major shale their third-quarter results. There appear to be previously. This would also represent a slow-
producers are beginning several factors behind the slowdown, including down from 25% production growth in 2021,
to see a slowdown in the producers’ drilling strategies, takeaway capacity when the super-major’s output from the basin
Permian Basin. constraints for associated gas and current supply reached 460,000 barrels of oil equivalent per
chain challenges. day on average. For the third quarter of 2022, it
WHY: Some producers – notably super-majors Exx- reached nearly 560,000 boepd.
Various factors are onMobil and Chevron – are now warning that ExxonMobil’s chairman and CEO, Darren
starting to constrain oil their production in the Permian Basin will now Woods, said on the company’s earnings call that
production growth. grow more slowly than previously anticipated. one of the challenges in the Permian has been
(See: ExxonMobil, Chevron profits beat expec- maximising the recovery of the resource there.
WHAT NEXT: tations, page 7) Meanwhile, Permian-focused “I think we’ve talked before about some of the
Some drillers are shifting Pioneer Natural Resources has said it intends technology that we’re bringing to bear to make
their focus to wells that to reshuffle its portfolio next year to prioritise sure that we are doing that in the most cost-ad-
they expect to generate wells with potentially higher returns as it tries vantaged way,” Woods said. “Obviously, as we go
higher returns for them. to boost productivity. through that, we’re optimising and adjusting our
development plans.”
Warning signs Woods also pointed to a tight market, with
Indications that a Permian slowdown is starting limited capacity to accelerate activity beyond
are still in their early days, though more evi- what was previously planned for the short term.
dence to support this could emerge by the time However, this is a constraint that he expects to
the earnings season comes to a close. If more ease with time.
producers start to talk about underperformance Chevron, for its part, now anticipates that its
or other challenges with their Permian Basin Permian production will be towards the lower
operations, the issue can be expected to attract end of the 700,000-750,000 boepd that it has
considerably more attention. However, there been targeting for this year. In the third quar-
are already some warning signs in what has ter, the super-major’s production in the basin
been reported by ExxonMobil, Chevron and reached 708,000 boepd, up about 10% year on
Pioneer as part of their third-quarter earnings year.
disclosures. Chevron’s chairman and CEO, Mike Wirth,
ExxonMobil, which has been increasingly noted that working through its inventory
focusing on the Permian Basin as one of its core of drilled but uncompleted (DUC) wells

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