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Oil & Gas’ Latest Rally Encourages Growth Within Cash Flow

While investor’s view of capital disciple evolves, production could outpace demand in coming in years

Media Contact: Jon Haubert | 303.396.5996

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Calgary, Alberta (November 10, 2021) — Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released its latest FundamentalEdge report focusing on the company’s five-year supply, demand and price outlook.

“Current price levels support production growth of more than 10% even while spending well within cash flow, but investor definitions of ‘capital discipline’ are evolving through the run-up in prices. Recent commentary from public operators suggests the growth discussion has returned, but investor pressure to focus on cash returns remains unyielding,” said Farzin Mou, vice president of Enverus Intelligence Research.

Jen Snyder, managing director and head of North America Macro Intelligence Research, who co-authored the report, added, “We expect oil and gas production growth to outpace demand growth in 2022 and 2023 — a return to normal weather conditions in key markets and a recovery in upstream activity levels this year will restore some balance — yet operators should plan for shorter cycles in prices.”

Key takeaways from the report:

  • OPEC shows no signs of wanting to arrest the price rally ahead of weaker balances in 1H22, and the resulting strong prices set up an increase in market share for North American liquids. We believe U.S. production will grow ~600 Mbbl/d and ~890 Mbbl/d exit-to-exit in 2021 and 2022 before moderating in the medium term.
  • Enverus believes the Permian will continue to drive growth, accounting for ~96% of 2022 exit production growth before moderating thereafter.
  • North American gas markets head into winter without much cover against colder-than-normal weather with: storage inventories below five-year averages, weather-normal injection rates below norms, coal-fired power plants at capacity and global gas prices too high for economically feasible cuts in U.S. LNG feedgas demand.
  • Dry gas production growth of nearly 4 Bcf/d exit-to-exit in 2022 remains concentrated in the Haynesville and Permian. Moderation in oil-weighted activity slows Permian volumes to less than 0.7 Bcf/d growth exit-to-exit per year thereafter while the Haynesville’s growth trajectory follows the LNG export outlook, ebbing in 2023-24 and accelerating in 2025-26.

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Members of the media should contact Jon Haubert to schedule an interview with one of Enverus Intelligence Research’s expert analysts.

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

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