Lower 48 exploration and production (E&P) companies, particularly those with Permian Basin exposure, are loosening their purse strings this year, while some of the largest operators are trimming investments as capital-intensive projects wind down, according to Wood Mackenzie.
An analysis of 2017 guidance issued during the 4Q2016 reporting season found that for the most part, capital expenditure (capex) and production targets depend on a company's operational focus, the firm said Thursday.
Upstream investments are on track to increase for 99 of the 119 operators initially reviewed by Wood Mackenzie.
"In aggregate, the 119 companies covered by the report plan to spend $25 billion more in 2017, a year-on-year increase of 11%," researchers said. However, many of those cutting capex this year are among the largest in the sector, including Chevron Corp. and Total SA.
Chevron is nearly done with major outlays for expensive Australian natural gas export projects, but overall, the "trend to spend is down," CEO John Watson said in January.
"Those companies focused on the U.S. have booked the largest increase in planned spending, with budgets set to rise 60% year/year, accounting for $15 billion of additional investment."
Tight oil specialists that have increased their 2017 capital budgets include onshore pioneers Pioneer Natural Resources Co., which has a capex plan of $2.8 billion, and EOG Resources Inc., with spend estimated at $3.7-4.1 billion.
Their onshore capex plans underline "the attractiveness of the Lower 48's shale plays, even at current prices,” said researchers. “Bigger budgets are also expected in Canada, Latin America and Russia."
For many operators, this year will be about returning to growth, Wood Mackenzie said.
"The 98 companies that have announced production guidance for the year expect to produce a combined 1 million boe/d more than in 2016, year/year growth of about 5%. Some of that growth will come from acquisitions."
The U.S.-focused group reviewed accounts for 800,000 boe/d of the total production, a 15% increase from 2016. Internationally focused companies, however, expect to see overall production declines this year.