U.S. shale producers choose to optimize portfolios in 2018

By Patrick C. Miller | April 02, 2018

In early 2018, some U.S. shale producers are shifting their focus by optimizing portfolios through acreage transactions, according to Rystad Energy—an independent energy consulting firm headquartered in Oslo, Norway.

Rystad Energy noted the trend in its March shale newsletter. By optimizing acreage portfolios, the firm says U.S. shale E&P companies are deciding which of their assets represent a good balance between risk and return. Acreages that don’t meet the threshold are being sold or traded for core acreage to ensure that the company is able to safeguard growth, while ultimately staying cash flow positive, the article said.

“U.S. onshore shale producers are also boosting capital expenditure by 20 percent and increasing production guidance,” the newsletter reported. “In the Permian, producers are indicating a 40 percent year-on-year increase in oil volumes, equating to 850,000 boe/d, by the end of 2018.”

Rystad Energy analyzed the shift in portfolios by looking at the changes in 2018 production guidance across different hydrocarbons. The companies in the peer group were chosen among the ones that recently closed or at least announced portfolio-altering transactions.

Rystad Energy reviewed investments of several U.S. onshore producers’ investments for 2018, comparing them against their reported 2017 capital expenditures. The firm concluded that total E&P capital expenditures for the companies amounted to around $50 billion in 2017. On average for 2018, operators expect a 20 percent increase in spending.

“EOG Resources, Oxy and Chevron stand out as companies significantly increasing their shale capital expenditures this year,” the article stated. “Oxy and Chevron are boosting capex in the Permian plays, while EOG Resources is planning to invest more in several high-rate-of-return oil assets, including the Permian Delaware, Eagle Ford, Woodford and others.”