In 2023, US oil production, as estimated by the monthly EIA data, has been coming in higher than expected based on the predictions by the long-term oil production forecast model. The long-term oil production forecast model uses the midpoint of producer guidance forecast estimates and then adjusts it for private sector fracking activity relative to public sector fracking activity.
The reason for the higher-than-expected oil production is because producers as a group have been outperforming the midpoint of their production guidance forecasts by around 1% on average. The 1% outperformance also roughly equates to how much the long-term oil production forecast has been off in 2023.
The same can also be said in Texas, where Permian production outperformance has been significantly stronger than expected.
Permian oil production outperformance at 2.5% above forecast has been stronger than overall US oil production outperformance at around 1.0%.
Permian Production Efficiency
There have been some reports of degrading or lessening productivity on a per 1,000-foot basis per well in the Permian basin since around the beginning of 2023 with the increasing advent of 3-mile lateral wells. Callon Petroleum even mentioned it in their 2nd quarter 2023 earnings presentation, although their own per 1,000-foot well level productivity has been flat in 2023 compared to 2022.
Pioneer Natural Resources, one of the largest oil and gas producers in the Permian basin, shows higher per 1,000-foot well level productivity in 2023 as compared to 2022.
We will be discussing these productivity issues on our Twitter webinar on September 29th. Stay tuned!
