U.S. shale growth faces headwinds on costs and equipment, EOG says

(Bloomberg) — Inflation and brisk competition for the most-sophisticated drilling gear will hinder U.S. oil-supply expansion this year, according to shale giant EOG Resources Inc. 

“Inflationary and supply chain pressures” will limit production growth to the lower end of estimates, Chief Executive Officer Ezra Yacob said during a conference call with analysts on Friday. Major forecasters recently boosted estimates for 2022 U.S. oil-production growth to 750,000 and 1 million barrels per day. 

Most of the best drilling rigs and fracking fleets already are under lease, Chief Operating Officer Billy Helms said: “There are not a lot of new pieces of equipment that can come into the market.”

EOG, the second-largest shale-focused explorer, plans to cap output growth to 3.6% this year, following similar pledges from Pioneer Natural Resources Co. and Continental Resources Inc. So-called independent drillers like EOG comprise about 55% of onshore production in the continental U.S., according to IHS Markit Ltd.