EOG Resources, one of the largest operators in the U.S. shale patch, has signaled it would be willing to boost oil production if there is demand for it.
In a video conference hosted by Goldman Sachs, chief executive Ezra Yacob said EOG could return to pre-pandemic production levels this year as long as it makes economic sense.
“EOG would be in a position to return to pre-Covid levels of production,” Yacob said, as quoted by Bloomberg. “If the world has a call on oil and there’s room to grow our low-cost, lower- emissions barrels into the market, we can certainly deliver on that.”
U.S. oil producers, especially those in the shale patch, have been focusing on shareholder returns amid the pandemic, after years of plowing billions into higher production only to see it slump as the lockdowns began last year.
Facing disgruntled shareholders, shale producers chose to keep production lower and boost dividends and other payouts instead.
Investor attitude has been one of the reasons the shale industry did not respond to calls from the White House for higher oil production as the administration struggled to put a lid on prices at the pump. The other reason has been the White House’s choice to turn to OPEC for this kind of help first, overlooking the domestic oil industry.
The outlook for oil demand remains bullish for now, not least because there are doubts that OPEC and its partners in OPEC+ have the spare capacity they need to continue adding 400,000 bpd to it. Recent production outages in Libya and Kazakhstan have also cast a shadow over the group’s plans for a return to pre-pandemic production levels.
With demand seen strong, this has opened up opportunities for non-OPEC producers such as U.S. shale drillers to step in and fill the potential gap in supply that some analysts warn may appear later this year.
By Irina Slav for Oilprice.com
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