Oil Majors Prioritize Shareholder Returns Over Production Growth

Major U.S. oil companies are adopting a 'plateau' strategy to prioritize shareholder returns and debt reduction over production growth, despite high crude prices.

Chevron, ConocoPhillips, and Occidental Petroleum have reduced drilling and fracking spending in the Lower 48 states by an average of 10% in the first six months of this year, according to earnings reports. Chevron's Permian team has achieved huge efficiencies with this focus on sweating assets, not growing production but rather free cash flow.

The trend is dampening U.S. crude supply growth, as operators are producing more oil for every dollar spent due to gains in drilling and fracking techniques. The U.S. will grow production by about 200,000 barrels a day this year to 13.8 million barrels a day, according to the Energy Information Administration forecasts.