Wednesday, 14 May, 2025 / Edition 58

My better half and I played a special partners golf tournament to celebrate Mother’s Day weekend. We had fun meeting friends old and new in perfect weather. I hope the mothers in the United States amongst our readers had a good celebration, too. You are the true heroes of life.

Now, let’s look into two pieces of energy news from past week.

Shangyou Nie

Editor, Well Read

U.S. Oil Production “Likely Peaked,” Says Diamondback CEO

James BO Insogna/ Shutterstock.com

During Diamondback Energy’s Q1 results call, CEO and Chairman Travis Stice said U.S. oil production might have already peaked and will start to fall this quarter. 

The latest:

• Falling oil prices are forcing some U.S. onshore producers to cut their capital budgets.

• For example, Diamondback will reduce its 2025 CapEx from $4.2 billion to $3.8 billion.

• Diamondback also revised its 2025 production guidance from 490,000–505,000 barrels of oil per day to 480,000–495,000 barrels of oil per day during its May analyst call.

Others doing the same:

• Similarly, EOG Resources, one of the largest U.S. shale producers, recently announced plans to cut its 2025 capital program by $200 million and maintain oil production at its Q1 2025 level.

• EOG’s adjustment is in response to “a potentially over-supplied market in the short term,” said Ezra Yacob, chairman and CEO, during the company’s Q1 analyst call.

• Houston-based Coterra Energy will also cut $100 million from its CapEx, dropping from $2.1–2.4 billion to $2–$2.3 billion in 2025. It will also drop its rig activity from ten to seven.

Market conditions:

• Several factors have contributed to the recent drop in oil prices, including a fear of a global economic slowdown and reduced energy demand, as well as OPEC’s recent decision to remove production cuts.

  • On 7 May, oil prices were at a four-year low, with Brent at $60.23 per barrel and West Texas Intermediate at $57.14 per barrel.

  • The oil price has rebounded in recent days, partly in response to the news of initially successful trade negotiations between the United States and China.

  • As of Monday, Brent was $64.90 per barrel, while WTI was at $61.61 per barrel.

• When WTI drops below $60 per barrel, some U.S. shale producers will struggle to turn a profit, although others claim they have break-even portfolios as low as $40 per barrel.

• During CERAWeek 2025, several industry executives commented that U.S. production would peak before 2030.

  • According to the DOE’s Energy Information Administration, total crude production in the United States in February 2025 was 13.159 million barrels per day, down from a high of 13.450 million barrels per day in October 2024.

• As some 85 percent of U.S. production is onshore, if onshore production has peaked, U.S. production overall has also likely peaked.

What to watch:

• Will some companies attempt counter-cyclic acquisitions during these times of lower oil prices?

• EOG said during the call that it will test a gas project in Bahrain. Is this perhaps one example of American companies looking for long-term international opportunities beyond shale?

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Canadian Oil Executives Encourage New Government to Revitalize the Oil and Gas Sector

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Leaders from 38 Canadian companies wrote an open letter to the newly elected Canadian government. They also held direct talks with Prime Minister Mark Carney to encourage removal of “barriers of investment” for its oil and gas industry and “to position our country as a global energy superpower.”

Details:

• The letter calls on the government to help strengthen economic sovereignty and resilience by unlocking private sector investment, developing Canada’s world-class natural resources, and supporting climate action.

• It says, “Over the last decade, the layering and complexity of energy policies has resulted in a lack of investor confidence.”

  • This is “a barrier to investment—especially when compared to the United States, which is taking steps to simplify its permitting process.”

• The letter also argues that the oil and gas industry can help the new government’s ambition to “build the fastest growing economy in the G7.”

• It was signed by top executives from companies including Cenovus Energy, Suncor Energy, Imperial Oil, Enbridge, Canadian Natural Resources and Chevron Canada, and ConocoPhillips Canada.

The letter’s Five-Point Action Plan:

To help Build Canada Now, the letter called for five urgent actions:

1. Simplify regulation: Current regulatory processes are “complex, unpredictable, subjective, and excessively long,” according to the letter.

2. Commit to firm project approval deadlines: Major projects should be approved within six months of application, rather than the two-year process that Carney proposed.

3. Grow production: To eliminate an “unlegislated cap on emissions” and allow the oil and gas sector “to reach its full potential,” the letter calls for production growth.

4. Attract investment: The federal carbon levy is too high. The letter calls emission policy to be set by provincial governments, rather than the federal government.

5. Incentivize indigenous co-investment opportunities: The federal government needs to provide indigenous loan guarantees for the communities to have joint infrastructure ownership opportunities.

What they are saying:

• “I hope we see the political powers that be can have the will to enable that investment environment to allow this industry to perform to its full potential. When we do that, Canadians will benefit,” said Rich Kruger, Suncor CEO.

• “I’m going to take the prime minister in Canada at his word that he’s committed to building energy infrastructure in Canada [and] becoming a conventional and non-conventional energy superpower. I am excited; we are ready to rock,” said Greg Ebel, Enbridge president and CEO.

What to watch:

• How will Carney’s government respond?

• What major investment decisions will Canada make for oil, gas, and infrastructure in the near future?

• Will Canada be able to attract overseas investors to its oil and gas sector?

Read the full letter here.

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