U.S. to potentially surpass 2024 oil production expectations as Exxon, Chevron ramp up Permian operations
(Bloomberg) – Exxon Mobil Corp. and Chevron Corp. plan to aggressively ramp up production from the Permian basin this year in what could be an early sign that U.S. oil output may surpass expectations once again, like it did in 2023.
Chevron is targeting 10% growth this year, more than twice the pace of publicly traded independent oil companies, setting it on course to pump 1 MMbpd from the region in 2025. Exxon sees production growth of nearly 7%, but is expected to double its overall output once it completes the $60 billion of Pioneer Natural Resources Co. by mid-year.
“We are in the best parts of the Permian,” Chevron Chief Financial Officer Pierre Breber said during an interview. “Our growth is higher likely than the basin average but it is representative of our activity level and the activity level of our partners.”
The pace of U.S. oil production last year surprised traders and analysts, pressuring prices and piling pressure on the OPEC+ alliance to restrain output. Exxon and Chevron’s Permian development plans are closely watched as they are already among the basin’s biggest producers, meaning their growth rates are coming on top of already high output levels, adding to global supplies.
Analysts were skeptical Chevron would meet its full-year production guidance because of several poor quarters during which the company struggled with infrastructure problems and other operational issues. But a knockout fourth quarter saw Chevron produce 867,000 bopd, 12% higher than the previous quarter. Production growth in 2024 will be similarly “back-end loaded” to the latter half of the year and may drop in the first half, Breber said.
Exxon, which will become far and away the Permian’s biggest producer once it buys Pioneer Natural Resources Co., grew in-basin production by 12% in 2023, exceeding its 600,000 bpd guidance. Excluding Pioneer, the Texas oil giant expects to ramp up to 650,000 bpd this year.
Exxon CEO Darren Woods said Friday the company plans to treat its massive Permian operation like a factory by building a robust inventory of drilled wells but holding off on fracking them — a practice known as drilled-but-uncompleted oil and gas wells, or DUCs.
“The trick is to get that inventory level right. You don’t want a bunch of capital sitting there that isn’t earning its return,” Woods said on an earnings conference call with analysts.