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OPEC+ postpones production increases

World

The OPEC+ group has delayed its planned relaxation of some production cuts as global supermajors report record production levels.

The move is not surprising, seeing as the group always said that market conditions would determine if the planned increase of 180,000 barrels per day would go ahead.

While growth in the world’s demand for oil has been relatively weak, increased production by the world’s biggest oil companies has also played a role. In their recent quarterly results, supermajors like Shell, ExxonMobil, BP, Chevron and TotalEnergies reported strong oil production.

In addition to their traditional hydrocarbon production businesses, these companies also produce lubricant and grease products, such as under the Castrol and Mobil brands. What’s more, in addition to producing more oil, they’re doing it more cost-efficiently.

For example, the CEO and chairman of ExxonMobil, Darren Woods, said in an earnings call:

“In the third quarter, we grew production to 4.6 million oil-equivalent barrels per day, a 24% increase versus the prior-year quarter. To drive higher value, we continue to improve the profitability of the barrels we produce. Our progress has been exceptional.”

He added that based on a constant price, ExxonMobil’s unit earnings per barrel of oil equivalent have doubled from $5 in 2019 to $10 for this year so far. This excludes the Permian assets that it acquired recently through its acquisition of Pioneer.

Woods said it would start spudding 20,000-foot laterals on the land this quarter. He said this would improve capital efficiency by reducing the surface footprint and requiring fewer wells.

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