ConocoPhillips flags concern over Permian: Update

Adds financial and production data from earnings release.

US independent producer ConocoPhillips warned of the risks of runaway shale growth after the nation's largest producers unveiled plans to ramp up output from the Permian basin.

Chief executive Ryan Lance said the lessons of past shale booms which triggered damaging price wars with Opec nations were "right at the front of our mind."

He spoke after ExxonMobil and Chevron announced plans to increase output from the top US shale play of west Texas and southeastern New Mexico by 25pc and 10pc, respectively, in 2022.

"If you're not worried about it, you should be," Lance told analysts after ConocoPhillips reported fourth-quarter earnings.

Just last week, Lance had forecast overall US output was set to climb by around 800,000 b/d this year. He has now revised that estimate up to as much as 900,000 b/d, with a similar rate of growth expected for 2023.

"We were a bit surprised at the strength of some of the numbers we were hearing," Lance said, in respect to recent announcements.

By comparison, the US government projects an increase of almost 650,000 b/d this year, with output hitting a record in 2023.

While private companies and the largest producers are leading the charge back into the shale patch, public independents have continued to exercise capital discipline even as oil prices have surged, in order to boost returns.

Earlier today, ConocoPhillips set out plans to return capital of $8bn to shareholders this year, an increase of $1bn from an earlier target.

Profit of $2.6bn in the fourth quarter compared with a loss of $772mn in the year-earlier period. ConocoPhillips plans to boost spending to $7.2bn this year from $5.3bn in 2021.

The producer became the second-biggest producer in the Permian last year with the $8.6bn acquisition of assets from Shell, which followed the $9.7bn acquisition of Concho Resources.

Full-year production excluding Libya came in at 1.5mn barrels of oil equivalent a day (boe/d). Output is expected to increase to 1.8mn boe/d in 2022, including Libya.

By Stephen Cunningham