The US oil industry is unlikely to see "positive" price signals while a question mark hangs over the size of a looming worldwide glut, according to Permian operator Diamondback Energy.
Oil demand is "healthy" but future oil supply growth has become a "hotly contested" debate with widely diverging forecasts as to the extent of an oversupply expected in the fourth quarter and first half of 2026, chief executive officer Kaes Van't Hof said.
"We firmly believe there is no need for incremental oil barrels until there is a proper price signal," he said in a shareholder letter today after reporting third-quarter results. "Until that time, we will put our head down and continue to work to lower our industry-leading oil price breakeven, reinvestment rate and cost structure so we can maximize free cash flow."
Diamondback slightly revised its full-year oil production forecast higher, reflecting the closing of its subsidiary Viper Energy's acquisition of Sitio Royalties. It now expects oil production in the range of 495,000-498,000 b/d, an increase of 8,000 b/d at the midpoint of the previous range.
The company has reduced spending by $500mn over the past two quarters when compared with its original guidance for the year. And it has also surpassed an asset sales target of $1.5bn that was announced in February when the company acquired subsidiaries of Permian operator Double Eagle.
The company touted efficiency gains, including a new well completion process that is speeding up drilling times.
