Written by David Wess and Kevin Crowley
A pump jack and drilling rig on an oil well in the Permian Basin near Midland, Texas. Photographer: Daniel Acker/Bloomberg
U.S. shale companies are moving forward with production plans, adjusting to $60 oil prices while adjusting for modest price increases and setting the industry up for next year’s record glut.
Diamondback Energy Inc., Coterra Energy Inc. and Orvintiv Inc. this week announced plans to increase production slightly this year or into 2026, even as oil prices have fallen near the threshold needed for many U.S. shale wells to break even. Exxon Mobil last week strengthened its position as the Permian Basin’s largest operator, raising its 2025 production forecast by 100,000 barrels of oil equivalent per day, more than the combined output of some smaller companies.
It’s all thanks to advances in recent years that have allowed producers to become more efficient and pump more oil for every dollar spent.
“Shale needs to become to a large extent a technology story, not in the Silicon Valley sense, but in the drilling technology sense,” said Ben Hoff, global head of commodity strategy at Société Générale SA. “This has allowed the industry to keep barrel production relatively constant while working on the other side of the book in terms of costs.”
The resilience of U.S. oil production is in stark contrast to earlier this year, when oil prices fell 15% in less than a week after President Donald Trump announced a slew of additional tariffs in April. As OPEC ramped up supplies, U.S. oil executives at the time raised the possibility of scaling back U.S. production if prices fell toward $50 a barrel, below the break-even point for most of the industry.
But that price didn’t last long. And U.S. crude oil production hit a new record in August at nearly 13.8 million barrels a day, as shale’s long-standing efficiency drive helped drive down costs, according to the Energy Information Administration. Part of the increase was driven by increased production in the U.S. Gulf Coast, where several long-standing projects recently came online.
Source: Federal Reserve Bank of Dallas
Note: Survey of business owners in March 2025. Crude oil prices are West Texas Intermediate
But it’s also clear that small technological advances in shale are adding up.
“Never underestimate American engineers,” Diamondback CEO Case Van’t Hoff said in a letter to shareholders on Monday.
“Despite the macro headwinds, we will find ways to generate further revenue,” he said on a conference call with analysts.
Faster drilling and improved pumping methods have lowered Diamondback’s breakeven oil price to about $37 a barrel, 8% lower than two years ago. Kotera raised the possibility of 5% growth next year to about 168,000 barrels per day, while cutting spending “modestly.” Some of the savings will come from installing microgrids in West Texas to reduce power costs, according to the company’s generation guidance.
Extracting more oil from the ground with less resources is having a huge impact on jobs. The number of drilling rigs in the Permian has declined by almost 30% since the beginning of 2024. The number of workers injecting water, sand and chemicals to complete new wells has decreased by 20%. Midland, Texas, the unofficial capital of the Permian, is experiencing a noticeable decline in its workforce.
“Activity here is definitely slowing down,” Will Hickey, co-chief executive officer of Midland-based Permian Resources, said on a conference call with analysts Thursday. “You can feel it on the streets of Midland.”
Still, companies are looking for ways to pump more oil.
Ovintif, a Denver-based shale producer with assets from Western Canada to the Permian, raised the midpoint of this year’s guidance by less than 1% to 209,000 barrels per day, keeping previously cut spending plans in place.
But Exxon was the biggest beneficiary, raising its 2025 production forecast by 7% to 1.6 million barrels of oil equivalent per day. This increase alone is equivalent to the entire production output of a small independent producer like Magnolia Oil & Gas. CEO Darren Woods credits new hydraulic fracturing techniques, including the use of lightweight proppant, to improve recovery rates.
“This clearly distinguishes us from our competitors who advocate reducing investment, peaking production, and moving into harvest mode,” Woods said.
In today’s oversupplied oil market, a capital increase from the United States could have global implications. Macquarie Group, one of the few commodity trading firms to accurately predict shale growth in 2023, says prices need to fall to the low $50s per barrel range before the industry exits.
“At current price levels, U.S. producers still have an appetite for growth,” Walt Chancellor, a Houston-based energy strategist at Macquarie, said in an interview. “The market will need to signal to the US to stop growing because the balance looks like oversupply to us.”
(Added a note regarding the decrease in the number of employees.)
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