The pandemic-induced guts in US E&P capex were broken by rising commodity prices in 2022, with total investment across the 42 producers we track rising a whopping 54% over 2021 But E&Ps haven’t abandoned fiscal discipline or focused on cash. flow generation that allowed them to survive the destruction of COVID-related demand and resurrect investor interest. Their capital budgets for 2023 generally maintain the pace of spending in the fourth quarter of 2022 and reflect a modest increase of 17% over 2022. However, commodity price trends and changes in investment opportunities have resulted in significant changes in the allocation of total investment among the major non-conventional Theaters in the US. In today’s RBN blog, we’ll look at capital spending in 2023, region by region.
Figure 1 shows the regional allocation of the estimated $71.3 billion in 2023 capex for the 42 publicly traded E&Ps we cover. (This group includes all U.S. public production and mining companies with a market capitalization of more than $500 million, but not integrated energy companies such as ExxonMobil and Chevron.) As several years ago, the Permian Basin (blue dark) gets by far the biggest share. of the total investment to 43%. The total capital budgeted for the work is expected to increase by 17%, the same as the overall capex increase. However, allocations for other regions reflect significant changes. Investment in the Eagle Ford (grey portion), Bakken (aqua portion), and Rocky Mountains (light blue portion) is expected to increase by 32%, 36%, and 26%, respectively. On the other hand, Appalachia (green scale) capex, which rose 64% in 2022, will increase by just 9%, while Haynesville Shale (pink scale) spending will be flat from the previous year. Below, we review the changes in spending and the reasons behind each U.S. unconventional play.
