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ENB Pub Note: If you have heard the Energy News Beat Podcast, you have heard me say that ESG Investing has impacted American oil and gas companies and their commitment to their investors and stakeholders. I would say that goes for the public and private companies. For the public companies, it is easy to look at their share buyback programs, and for the private companies, I talk with CEOs, investors, and people in the business, and the good ones are providing excellent returns.
One key point is that the oil and gas sector in the U.S. has some of the best investment records and is a good investment compared to renewable or hydrogen failed projects. They have never been financially sustainable, and it will be more evident in the coming months.
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Industry-Wide CapEx Trends:
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In 2023, the U.S. oil and gas industry (including the 50 largest companies by reserves) recorded a total CapEx of $142.35 billion, with $11.12 billion for exploration and $82 billion for development.
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For 2024, a consortium of 25 U.S.-listed E&P companies planned to allocate $61.7–$65.4 billion for total CapEx, a decrease from $66 billion in 2023, reflecting capital discipline and efficiency gains.
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Analysts expect 2025 CapEx for U.S. E&P companies to remain flat to slightly lower than 2024, with a projected 0–5% growth for oil-focused producers, while natural gas producers may cut spending by ~10% due to weak prices. Wood Mackenzie estimates a 1.8% decrease in upstream corporate capital budgets for 2025 compared to 2024.
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The Dallas Fed Energy Survey (Q4 2024) indicates that upstream companies expect slightly increased CapEx in 2025, maintaining a conservative stance with a focus on maintenance CapEx rather than aggressive growth.
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Specific Company Announcements:
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ExxonMobil: In 2023, ExxonMobil’s CapEx was $26.3 billion. For 2024, it projected $23–$25 billion, and for 2025–2027, it anticipates $22–$27 billion annually, with a focus on Permian Basin growth and Guyana operations. Assuming 2025 aligns with the midpoint ($24.5 billion), a significant portion (e.g., 60–70%) is likely allocated to upstream activities, including drilling.
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ConocoPhillips: For 2024, ConocoPhillips budgeted $11–$11.5 billion, including funding for ongoing development drilling programs. Assuming flat or slightly lower spending in 2025 (e.g., $10.5–$11 billion), most of this supports drilling in the Permian, Eagle Ford, and Bakken.
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Chevron: Chevron’s 2024 U.S. production was ~1.6 million barrels of oil equivalent per day, with a 19% increase from 2023. While specific 2025 CapEx figures are not provided, Chevron’s focus on Permian growth suggests continued significant drilling investment, likely in the range of $10–$15 billion for upstream activities, based on industry peers.
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Occidental Petroleum, EOG Resources, and Diamondback Energy: These companies are major players in the Permian Basin. While exact 2025 figures are unavailable, Diamondback is expected to prioritize free cash flow over growth, suggesting flat or reduced CapEx (e.g., $2–$3 billion). EOG and Occidental likely maintain similar budgets (e.g., $5–$7 billion each for upstream), based on 2024 trends.
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Market and Policy Context:
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Low oil prices (WTI projected at $66/barrel in 2025, down from $74 in 2024) and global oversupply (OPEC+ increasing output) are pressuring companies to reduce drilling budgets.
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The Trump administration’s “drill, baby, drill” policy, initiated in January 2025, aims to streamline permitting, but industry response is cautious due to mediocre breakeven prices ($59–$70/barrel for new wells) and tariff-driven cost increases (e.g., 25% on steel).
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Efficiency gains (e.g., longer laterals, multi-well fracking) and a low inventory of drilled but uncompleted wells (4,500 in 2024) mean companies must invest more in new drilling to maintain production, potentially offsetting some CapEx reductions.
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Regional Focus:
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The Permian Basin remains the epicenter of U.S. drilling, with $136 billion in M&A deals since 2023 and new pipeline capacity (e.g., Matterhorn Express) supporting production. However, high acreage prices are shifting some activity to Eagle Ford and Bakken, where CapEx may increase.
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Deepwater drilling (e.g., Gulf of Mexico) is seeing renewed interest, with Rystad Energy projecting $130.7 billion in global deepwater investment by 2027, a portion of which will come from U.S. majors like ExxonMobil and Chevron.
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Scope: Focus on upstream CapEx (exploration and development), as drilling is a subset of these activities. Development CapEx (e.g., drilling and completing wells) is typically 70–80% of total upstream spending, per 2023 data ($82 billion development vs. $11.12 billion exploration).
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Major Players: The top 10 U.S. oil and gas companies by market cap (e.g., ExxonMobil, Chevron, ConocoPhillips, Occidental, EOG, Hess, Diamondback) account for a significant share of industry CapEx. In 2023, the 50 largest companies spent $142.35 billion, so the top 10 likely represent 50–60% of this (e.g., $70–$85 billion).
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2025 Adjustments: Based on a projected 1.8% CapEx decrease (Wood Mackenzie) or flat to 5% growth (S&P Global), I adjust 2024 estimates (e.g., $61.7–$65.4 billion for 25 E&Ps) to derive a range for the top players.
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Drilling Share: Drilling and completion (D&C) typically account for 50–60% of upstream CapEx, based on industry reports, with the rest for infrastructure, geological surveys, etc.
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2024 Baseline for 25 E&Ps: $61.7–$65.4 billion total CapEx.
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2025 Adjustment: Assume a 1.8% decrease (conservative scenario) to flat spending:
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Lower bound: $61.7 billion × (1 – 0.018) = ~$60.6 billion
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Upper bound: $65.4 billion × 1.00 = $65.4 billion
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Top 10 Share: Assume the top 10 companies (e.g., ExxonMobil, Chevron, ConocoPhillips, etc.) account for ~60% of this, reflecting their dominance:
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Lower bound: $60.6 billion × 0.6 = ~$36.4 billion
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Upper bound: $65.4 billion × 0.6 = ~$39.2 billion
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Upstream Focus: Assume 80% of this is upstream (exploration + development), as companies prioritize E&P over downstream or low-carbon investments:
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Lower bound: $36.4 billion × 0.8 = ~$29.1 billion
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Upper bound: $39.2 billion × 0.8 = ~$31.4 billion
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Drilling Program Share: Assume 50–60% of upstream CapEx is for drilling and completion:
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Lower bound: $29.1 billion × 0.5 = ~$14.6 billion
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Upper bound: $31.4 billion × 0.6 = ~$18.8 billion
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Continued capital discipline, with flat to slightly reduced budgets due to low oil prices and tariff costs.
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A focus on Permian Basin, Eagle Ford, Bakken, and some deepwater drilling.
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Major players like ExxonMobil ($10–$12 billion for upstream, ~$5–$7 billion for drilling), Chevron ($6–$8 billion upstream, $3–$4 billion drilling), and ConocoPhillips ($5–$6 billion upstream, ~$2.5–$3.5 billion drilling) driving the majority of spending.
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Data Gaps: Exact 2025 budgets for most companies are not yet public, and estimates rely on 2024 projections and trends. Company-specific announcements (e.g., ExxonMobil’s $22–$27 billion range) provide some clarity but lack drilling-specific breakdowns.
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Price Sensitivity: If WTI falls below $60/barrel, companies may cut rigs and CapEx further, potentially lowering the estimate to ~$12–$15 billion. Conversely, a price rebound to $75–$80 could push spending toward $20 billion.
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Policy Impact: The Trump administration’s deregulation may not significantly boost 2025 drilling due to market constraints (e.g., oversupply, limited Tier 1 shale locations).
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Efficiency Gains: Improved drilling efficiencies (e.g., longer laterals) may reduce per-well costs, allowing companies to maintain production with lower CapEx, potentially skewing the estimate downward.
Oilprice.com
- Exxon, Chevron, Shell, and TotalEnergies are sticking to aggressive production growth plans—even as profits decline and oil prices soften.
- Much of the overproduction within OPEC is coming from Western-led projects in Kazakhstan, involving Exxon, Chevron, Shell, and TotalEnergies.
- Supermajors with deeper pockets and diversified portfolios are seizing the moment to gain market share in an oversupplied but still opportunity-rich market.
Big Oil majors have no plans to scale back their budgets despite oil prices softening and more barrels poised to hit the market. That may sound reckless in a bearish environment, but it’s anything but. With demand picking up in Asia and OPEC+ preparing to unwind production cuts faster than expected, Exxon, Chevron, Shell, and TotalEnergies are digging in—ready to pump more, not less.
ExxonMobil reported a decline in net profits for the first quarter to $7.7 billion, down from $8.2 billion a year ago. Chevron’s earnings fell more sharply to $3.8 billion from $5.4 billion, and Shell saw a 28% drop in Q1 profit. TotalEnergies reported a more modest 5% dip. Still, none of these companies flagged any spending cuts or strategic retreats. In fact, they’re doing the opposite: raising production targets and sticking to growth plans.
TotalEnergies saw its oil and gas output rise 4% in Q1, boosted by ramp-ups in Brazil, the U.S., Malaysia, and Argentina. Exxon is targeting a 7% production increase for the year. Chevron is aiming for 9%. Even Shell, while more cautious, continues aggressive buybacks and refuses to blink on capex.
The only supermajor to tweak its plans was BP—and even that move came under pressure from Elliott Management, the activist investor calling for deeper cuts and a clearer strategic direction. BP’s Q1 results showed weaker-than-expected earnings, sagging cash flow, and rising net debt—leaving it as the outlier in an otherwise unflinching group.
And now comes the real test: OPEC+ is reportedly planning to dump as much as 2.2 million barrels per day back into the market by November. According to sources cited by Bloomberg, the Saudis have lost patience with serial quota-busters Iraq and Kazakhstan. But there’s a twist—many of the companies responsible for Kazakhstan’s overproduction are Western majors: Chevron, Exxon, Shell, and TotalEnergies.
That’s right—Big Oil is now part of the cartel’s internal compliance headache.
“The presence of U.S. companies like ExxonMobil and Chevron in Kazakhstan could play a key role in driving the supply growth,” said Rystad Energy analyst Mukesh Sahdev. “This raises questions about the potential for U.S. backing to pressure OPEC+ into adding more barrels to the market.”
Which begs the real question: is this shaping up to be a good old-fashioned supply war?
There are certainly signs. China’s crude imports hit a 20-month high in March, jumping to over 12 million barrels per day. That surge reversed the slump seen in January and February and underscored Beijing’s appetite for bargain barrels. India, too, boosted imports from Russia to a nine-month high. When prices fall, the world’s biggest buyers step in.
That’s precisely what Big Oil is counting on. As prices soften, demand will rebound. And the majors want to be front and center when that happens. That explains why they’re not panicking over Q1 earnings declines. They’re playing the long game.
U.S. shale producers, however, are not nearly as relaxed. At sub-$60 Brent and WTI hovering near $56, the economics for independents are breaking down. Bloomberg reports that EOG Resources has cut $200 million from its 2025 capex and dialed back production growth from 3% to 2%. JPMorgan analysts called EOG “the canary in the coalmine”—a warning that more revisions may follow.
And they likely will. While shale drillers have made impressive gains in efficiency over the last decade, they’re still more exposed to price shocks than the vertically integrated supermajors. Shale needs sustained prices closer to $65–$70 to grow comfortably. Below $60, investment dries up fast.
That opens the door for Big Oil. With a mix of conventional, deepwater, and shale projects—and balance sheets padded by years of capital discipline—they can afford to wait out the noise. In fact, they’re betting the current softness in prices will be short-lived, and that when the rebound comes, they’ll be in position to dominate.
Meanwhile, OPEC+ is also feeling the pressure. The decision to accelerate the rollback of production cuts—cramming three months of increases into one, starting in June—suggests a cartel trying to get ahead of a deteriorating market. Whether this move is a show of strength or a prelude to discord remains to be seen. But it adds even more barrels into a market where Big Oil is already ramping up.
If there is a war brewing, it’s not just OPEC vs. shale anymore—it’s OPEC vs. Big Oil, with shale sidelined and Asian buyers cheering from the stands.
In short, the next few months could set the tone for the next chapter of global oil. Will the majors pull back if Q2 earnings disappoint? Possibly—but not likely. So far, they’ve shown every intention of outlasting the storm. And if that storm happens to knock out weaker rivals in the process, all the better.
The post Big Oil Isn’t Backing Down at $60 Oil appeared first on Energy News Beat.
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Energy News Beat