US-based oil majors ExxonMobil and Chevron have both announced plans to significantly ramp up oil production from their Permian Basin assets, indicating that the region could be returning to growth after a period of strict discipline.
US President Joe Biden has previously requested that the OPEC+ group increases production faster, but with the cartel sticking to its current plans and reportedly struggling to raise output in reality, production increases elsewhere will be very welcome. ExxonMobil and Chevron, which also produce lubricant ranges under the Mobil and Texaco brands, have announced planned production increases in the Permian Basin of 25% and 10%, respectively.
Even without considering these recent announcements, the US Energy Information Administration (EIA) has said it expects that by the end of the year, the country will be producing 630,000 barrels per day (bpd) of crude oil more than it does at the moment.
ESAI Energy’s Elisabeth Murphy cautioned about expecting oil prices to fall dramatically, while also saying that:
“U.S. production may surprise to the upside this year, but not by so much that it will significantly bring down oil prices. On top of that, OPEC+ is having trouble lifting output to add the additional barrels.”
Independent shale operators that are publicly traded are still maintaining their growth discipline with planned supply increases of just a few percentage points in order to remain attractive to investors, who currently prefer returns over growth. Exxon and Chevron, however, seem to think they can increase production to meet the rising global demand while still paying record dividends to shareholders.