EOG ready to raise shale oil output to meet market demand

HOUSTON (Bloomberg) --EOG Resources Inc., one of the biggest U.S. shale oil producers, is ready to ramp up output as soon as this summer if the market demands it.

The company has yet to resume pre-pandemic levels of production, but that could change this year under certain macroeconomic conditions, EOG Chief Executive Officer Ezra Yacob said in a virtual energy conference hosted by Goldman Sachs Group Inc. The driller is monitoring global oil demand, inventory levels and unused production capacity within OPEC+, Yacob said.

If the conditions are right, potentially by the middle of 2022, “EOG would be in a position to return to pre-Covid levels of production,” he said. “If the world has a call on oil and there’s room to grow our low-cost, lower- emissions barrels into the market, we can certainly deliver on that.”

Shares of U.S. energy companies are surging as oil rallies. The big question is whether shale drillers will use the extra cash to boost production this year, particularly as OPEC+ struggles to meet its output targets amid predictions of a smaller global surplus this quarter than previously expected. So far, the shale industry has shown little willingness to return to the high-growth days of the 2010s that sparked multiple, damaging price wars with OPEC and its allies.

EOG went further than the rest of its largest peers by offering a rough timeline of when it may increase drilling activity. Executives from Diamondback Energy Inc. and Devon Energy Corp., also speaking at the Goldman conference, said they would need to see a firm nod from shareholders before they’d increase output again.

Even if EOG goes ahead with an increase to production, it would only represent growth of about 5%, Yacob said. The goal is to invest “at a pace where each of your assets is getting better year after year.”

EOG plans to announce its 2022 capital budget and drilling plans in the latter half of February.