Majors Look To Permian For 2017 Rebound

Majors are looking to keep capex tight in 2017. They hope that by focusing extra cash on the US Permian they will be able to boost output nonetheless. With cost inflation already gathering pace they will struggle to pull this off.

The five supermajors plan collective capex spending of just $100bn in 2017, a further 3% cut from 2016’s multi-year low (see chart 1). This puts them on track to live out the IMF’s warning on an impending fourth straight year of capex cuts in 2017 (MEES, 16 September).

Despite this, they promise a rise in output. Collectively, with France’s Total the key exception (see box), they hope to pull this off by focusing available cash in one area – US shale and the Permian in particular.


Firms spent $12bn on US shale acreage in just the first 40 days of 2017. This comes on top of spending of $28bn last year according to Reuters figures, which itself was more than triple 2015. (CONTINUED - 2469 WORDS)


chart Majors Plan To Keep Spending Tight In 2017 (Capex, $Bn)
table 2017 Permian Land Purchases
chart Crude Output From The Three Key Us Shale Plays (‘000 B/D)
chart Us Shale Output Is Up 150,000 B/D From Sep16 Low But Still 160,000 B/D Below Mar15 Peak
chart Permian Output Never Stopped Rising As Productivity Gains Made Up For 2015’s Rig Count Collapse…
chart … Eagle Ford Looks To Have Bottomed Out At Just Over 1mn B/D With 10 Rigs Added In January Alone…
chart …But Bakken Production Is Still Falling (‘000 B/D)