AUSTIN, Texas (Jan. 9, 2024) — Enverus, the most trusted energy-dedicated SaaS company, has released its 2024 Outlook that includes a series of reports discussing topics the organization believes will shape the energy sector this year.
With a tumultuous year behind us marked by escalating inflation and interest rates, the challenge of navigating the Inflation Reduction Act, and the outbreak of multiple wars, the energy industry is grappling with an atmosphere of deep uncertainty. Enverus has compiled these insights from its intelligence research division into one encompassing 2024 Outlook that includes Enverus Intelligence Research’s (EIR) key energy trends to watch.
“In 2024 we expect relative strength in oil versus natural gas prices as OPEC+ remains in the driver’s seat and North American producers reckon with another year without material LNG export capacity growth,” said Dane Gregoris, managing director at EIR. “Given our rangebound outlook for commodity prices, we expect slowing U.S. supply growth and declining well costs per lateral foot, driven by ever increasing lateral lengths. Producers will remain laser focused on improving capital efficiency and adding low-cost drilling inventory through mergers and acquisitions, and stratigraphic exploration primarily within the Permian basin.”
“While interest rates, inflation and supply chain woes in 2023 saw returns erode away in the energy transition market, 2024 is setting up to be a year of action,” said Morgan Kwan, director at EIR. “Improving inflation and interest rates present compelling buying opportunities in some energy transition sectors, like residential solar. Increased policy clarity should support execution of a handful of energy transition technologies, like direct lithium extraction and geothermal to lead in the commercialization horse-race.”
“While emissions reporting and management may have been a forced entry into the energy transition for many molecules-led energy companies, it’s the stacking of technologies where oil and gas companies are finding success when building their businesses for the future,” Kwan said.
In its Outlook, EIR uses a holistic approach to energy research through comprehensive analysis of the oil and gas industry, energy transition and capital markets which provides readers with a unique view on what to expect concerning oil and gas, the energy transition underway and impacts from geopolitical actions. The EIR team is comprised of experts with diverse backgrounds beyond just finance, including engineering, geology and data science, and frequently engages in discussions with significant stakeholders throughout the broad energy sector. EIR’s predictions and forecasts are based on analysis from the industry’s most advanced dedicated energy SaaS platform. Below are some of their key takeaways and issues to watch in 2024.
10 predictions affecting oil and natural gas:
- OPEC+ steers oil to $90. Confidence in OPEC+ output discipline and slowing U.S. supply growth will underpin EIR’s call for this price prediction.
- LNG delay, warm winter pressure gas prices. Natural gas will remain in supply purgatory.
- Onshore well costs to fall 4% per lateral foot. Driven by efficiency gains and falling oil country tubular goods (OCTG) costs rather than lower rig or crew rates.
- Onshore cost competition will heat up. Cost differences between operators are under a microscope. Higher-cost producers will chase industry leaders to close the gaps in 2024.
- Inventory will drive E&P and investor decisions. Limited low-cost U.S. inventory will drive Canadian E&P interest and outperformance.
- Permian oil productivity to stabilize. Wells-in-progress indicate declining densities in 2024.
- Quality, execution will drive E&P equities. Avoiding negative capital efficiency revisions will be paramount.
- Permian M&A will slow. Lack of attractive in-basin targets will quiet down M&A in this prominent basin.
- Midland Barnett will make headlines. Competitive oil productivity and vertical isolation will drive more attention and development to the Barnett in 2024.
- Longer laterals, more development creativity. Inventory constraints and a competitive land market will drive creative development strategies.
10 energy transition themes and global impacts to watch:
- Business strategies and funding sources. Success will be found in the stacking of energy transition technologies.
- Commercialization horse race. Emerging technologies, like direct lithium extraction and geothermal, will enter commercialization in 2024.
- Returns pressure. Improving inflation and interest rates will present compelling buying opportunities, specifically in the residential solar supplier market.
- Reduced emissions. Emissions reporting data will be akin to financial data as increased involvement by the EPA and SEC amplifies the materiality of emissions.
- Execution frictions. Policy clarity will shift friction from regulation to execution.
- Global supply stable, anticipating LNG surge. Multiple, long-term deals support expectations that Qatari LNG capacity could almost double by 2027 and estimate that as much as 40% of new global LNG deals will be Qatari.
- Offshore oil and gas assets gain more traction. Supermajors, large independents, NOCs, and other well-capitalized explorers will dominate the search for significant new reserves.
- Lat-Am politics and West Africa analogues will drive interest. Geopolitical risk will be high on the agenda. Wells to watch will be on the equatorial Atlantic Margin.
- APAC emerging CCUS segment rekindles supermajor interest. Manufacturing powerhouses like Japan and South Korea are seeking a CCS solution abroad providing new business opportunities.
- Energy security, geopolitics will propel E&P activity in Europe, the Middle East and Africa. The impacts of conflict in the Middle East will be felt across the wider region, whilst domestic E&P investment across most of Europe will continue to decline.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
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