Shale explorer Diamondback Energy pledged to keep oil output flat in 2022, an early indication that the industry may continue to show spending restraint even as prices surge.
"This industry has tried a market share war with Opec before and it didn't work out," said chief financial officer Kaes Van't Hof. "So why don't we let Opec bring back their spare capacity and us stay flat?"
The company expects fourth quarter oil production from the Permian basin of west Texas and eastern New Mexico of 218,000-222,000 b/d. It aims to maintain output at that level next year.
Like other publicly traded producers, Diamondback has prioritized shareholder returns as the industry rebuilds from last year's pandemic-related collapse and years of excess spending prior to then. Chief executive Travis Stice pledged to return 50pc of expected free cash flow to investors starting from the fourth quarter.
Diamondback has shifted from being a company that consumes capital to one that returns capital, Stice said. That outlook would change only if investor sentiment shifts.
"If a company comes out and starts growing and gets recognized in the stock market for that growth, that's going to change the calculus for our board and how we allocate capital," Stice said.
Efficiency gains, especially in drilling and completion programs in the Midland basin of west Texas, helped offset pressures on well costs and allowed Diamondback to reduce its capital guidance for the second time this year. The company lowered its full-year capital spending forecast to $1.49bn-$1.53bn, a reduction of 4pc at the midpoint from the previous range.
Diamondback boosted its annual dividend by 11pc to $2/share.
The company posted third quarter profit of $649mn, compared with a loss of $1.1bn a year earlier.
