Most private shale operators in the Permian Basin of the United States plan to achieve modest growth this year, as one of the main engines of U.S. oil expansion is slowing amid volatile commodity fluctuations.
Jefferies Financial Group said in a note to investors on Friday that a survey of tightly controlled oil operators showed that 69 percent of U.S. Permian companies expect production to increase by 5 percent or less this year. Nearly half said they would need West Texas Intermediate** above $70 per barrel to be profitable in 2024. Oil prices in the United States have fluctuated between $66 and $93 per barrel over the past year amid global economic uncertainty.
The survey, which also includes private operators in key gas basins, provides the latest signs that shale blocks are slowing down. Private producers, who led the Permian shale growth post-pandemic, also plan to drill longer lateral wells to push lateral lengths above 10,000 feet. That's an improvement from last year's average of 9,400 feet of horizontal wells, the bank said.
Analysts, including Lloyd Byrne, wrote in the report: "This is a significant factor in shale drilling productivity in 2023. We do expect the average to continue to rise in the coming year (albeit slightly lower than in 2023). "Xiao Chen compiled).
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