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- Survey finds closely held group planning less than 5% increase
- Explorers say they need crude to be above $70 to make a profit
By David Wethe – Bloomberg
Most of shale’s private explorers in the Permian are planning modest growth this year as one of the main engines of US oil expansion downshifts amid volatile commodity prices.
A survey of closely held oil explorers showed 69% of Permian firms expect to grow production 5% or less this year, according to Jefferies Financial Group Inc. The same amount expect to maintain or cut their number of drilling rigs this year, the bank said Friday in a note to investors.
Nearly half indicated they need West Texas Intermediate crude to be greater than $70 a barrel to make a profit in 2024. Oil prices in the US have traded between $66 and $93 a barrel over the past year amid global economic uncertainty.
The survey, which also included private explorers in key natural gas basins, offers the latest indication that the shale patch is slowing down.
The private producers, who led the Permian’s shale growth coming out of the pandemic, also are planning to drill longer sideways wells, pushing beyond 10,000 feet in lateral length. That’s a boost from last year’s horizontal wells averaging 9,400 feet, the bank said.
“This was an important factor in ‘23 productivity across shale drilling,” analysts including Lloyd Byrne wrote in the note. “We do expect the average to continue to push out in the year ahead (although more modestly than in 2023).”
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