U.S. shale producer EOG Resources Inc. does not expect the current oil oversupply to ease as quickly as it did in the last downturn, a company executive told an energy conference on March 24.
"Long term, I don't see the supply side reacting as significantly has it has in the past," said Ken Boedeker, executive vice president for E&P.
Oil prices have fallen by more than half this year as the coronavirus pandemic cut demand and a price war erupted between Russia and Saudi Arabia. The two top producers have vowed to pump full bore to gain market share, reversing years of production curbs to prop up crude prices.
EOG planned its 2020 spending budget assuming around $40 a barrel oil, below where crude oil was trading at the beginning of the year, but above current prices. On March 24, U.S. crude futures were trading at under $24 a barrel.
The shale producer earlier this month said it would cut its 2020 budget by 31% to between $4.3 billion and $4.7 billion and targeted flat year-over-year oil and gas production.
On March 24, oilfield service firms Schlumberger Ltd. and Baker Hughes Co. said they would reduce spending, joining dozens of oil and gas companies slashing budgets since prices began plunging in early March.
Spending in the upstream sector could fall by more than 25% this year, estimated energy consultancy Wood Mackenzie Ltd.. Among recent expense reductions, Royal Dutch Shell Plc and Chevron Corp cut by 20% and ConocoPhillips by 10%.
Most of EOG's activity this year will be in the Eagle Ford Shale and the Permian's Delaware Basin, Boedeker said, adding it could reduce some plans if necessary.
EOG will continue to evaluate shale patch acquisitions, but it is not interested in expensive corporate deal-making, Boedeker said.
Drillers cut 62 oil rigs in the week to April 3, bringing down the total count to 562, Baker Hughes Co. said in its weekly report.
Production at the offshore Liza well is expected to reach some 120,000 barrels per day in its first phase.
Two extended-lateral Wolfcamp Shale producers completed by CrownQuest and a horizontal Frontier discovery in Wyoming’s Converse County top this week’s drilling activity highlights from around the world.