U.S. shale companies are enhancing oil production efficiency, achieving greater output with fewer drilling rigs. Recent data indicates that producers are extending wells up to three miles and utilizing multi-well drilling pads, allowing for simultaneous fracking of several wells. This operational efficiency is expected to increase global oil supplies, coinciding with OPEC’s plans to unwind its output cuts later this year.
Several major producers have raised their shale oil production targets for the year. Chevron, for instance, increased its Permian output forecast from a 10% gain to approximately 15%. Other companies, including Diamondback, APA Corp, and Devon Energy, have also adjusted their projections upward for the coming months. Occidental Petroleum raised its outlook for the Permian Basin by 1,000 barrels per day for 2024, excluding its acquisition of CrownRock.
Devon Energy reported a 12% improvement in drilling efficiency and a 6% increase in the rate of well completion, which has prompted a 3% rise in its full-year oil output expectations. Permian Resources has similarly increased its production target by 1.5%.
Walt Chancellor, an energy strategist at Macquarie Group, noted, “Ultimately, we do see a market that will end up oversupplied in the fourth quarter.” Macquarie estimates that U.S. production could grow by about 500,000 barrels per day by the end of the year, surpassing government forecasts of a 300,000 barrels per day increase.
This situation poses challenges for OPEC, which may struggle to implement its plan to restore production levels over the next year.