Shale drillers risk creating oil supply glut


Diamondback Energy is planning to hold its own output growth to 2% next year and said it can be flexible with spending if the oil market is oversupplied in 2025. — Bloomberg

NEW YORK: Diamondback Energy Inc, the largest independent oil and gas producer in the Permian Basin, warned that the US shale industry may be growing to its own detriment again.

The company is planning to hold its own output growth to 2% next year and said it can be flexible with spending if the oil market is oversupplied in 2025.

The problem, though, is how other companies are viewing their ability to grow based on calculations such as lower break-even costs.

“That spreadsheet math is what’s gotten this industry in trouble in the past and feels like we’re getting ourselves in trouble again,” chief financial officer Kaes Van’t Hof told analysts and investors on Tuesday on a conference call.

“Free cash flow trumps capital expenditure at Diamondback these days.”

After last year’s surprising surge in shale production growth, the global oil market is watching US explorers closely for any signs they’re opening the taps again.

Rising shale supplies have put the Organisation of the Petroleum Exporting Countries on the defensive, with the cartel and its allies agreeing to delay a December production increase as prices struggle.

During recent third quarter earnings calls, Matador Resources Co and ConocoPhillips were among US producers that raised their production guidance for this year.

Diamondback also boosted its outlook after closing its deal for Endeavor Energy Resources LP. — Bloomberg

Follow us on our official WhatsApp channel for breaking news alerts and key updates!
   

Next In Business News

Malton’s net profit surges 73%
Sarawak Oil Palms net profit up 30% in 3Q24
Strong ops performance lifts Axiata’s net profit
TNB 3Q24 net profit soars 85% year-on-year
Capital A records net profit of RM1.64bil for 3Q24
Dnex actively pursuing more producing assets
Business community mourns the passing of AK
Hong Leong Bank commences financial year on a strong note
Sime Darby’s net profit jumps to RM800mil in 1Q25
CIMB’s commitment to delivering value paying off

Others Also Read