U.S. shale oil producer EOG Resources (EOG.N) on Friday said it expects to deliver roughly 4% oil and gas volume growth this year, and hold a similar trajectory in 2023, as inflation and supply chain problems continue to snarl the oil industry.
Inflation has meaningfully exceeded expectations, the company said, noting that it has been able to offset some costs with efficiency gains. The market could face additional inflation next year, pushing well costs higher, executives warned in a conference call.
“Oilfield service capacity remains extremely tight and is further constrained by the limited availability of materials and experienced labor,” Chief Operating Officer Billy Helms told investors. Those constraints are fueling uncertainty in service costs, and would continue to do so next year, he said.
Despite inflationary pressure, U.S. oil producers are reporting blockbuster profits this quarter, supported by higher oil prices, which hovered around $100 a barrel for much of the second quarter.
Unlike some of its rivals that expanded spending budgets this year, EOG has held steady its capital expenditures forecast.
“Good to see reiteration of Capex, given industry inflationary pressures,” analysts for Tudor, Pickering, Holt & Co wrote in a note on Friday.
Shares were up about 7% to $106.87 in morning trading.
EOG said it was seeing promising results from its newer Dorado dry gas properties in South Texas, and anticipated directing additional investment there.