Higher oil prices mean U.S. oil and gas companies are spending more than projected on capital investments. Some operators raised their budgets by 8 percent during 2Q. That’s a $3.7-billion increase.
At the same time, oil-production volumes were modified upward by just 1.4 percent. Rystad Energy, an energy research and business intelligence company, points out, “This disconnect might suggest that the shale industry requires more capital than before to achieve healthy production growth. In fact, while a part of increased spending is due to service cost inflation, a significant part of the incremental budget is also planned to be used for additional drilling throughout 2H 2018 to support more intensive completion activity and production growth in 2019.”
Occidental Petroleum is set to add two rigs in the Permian Basin and is upping its capital budget in that region by $900 million. Pioneer raised its budget by $400 million and will be expanding its rig count by four. Apache boosted its budget by $400 million and WPX by $200 million