Shale producers Pioneer Natural, Devon tighten budgets after profits plunge

By Arunima Kumar and Arathy Somasekhar

(Reuters) -Shale producers Pioneer Natural Resources (NYSE:) Co and Devon Energy Corp (NYSE:) on Tuesday tightened budgets and warned of lower drilling and completions activity in coming months after a drop in oil and gas prices slashed their second-quarter profits.

U.S. shale producers have been forced to reduce the number of rigs in operation and delay well completions as profits have fallen from bumper 2022 levels after crude prices eased from multi-year highs.

Pioneer, a top producer in the Permian shale basin, cut its 2023 budget, including for drilling and completions, by $125 million to a range of $4.375 billion to $4.575 billion.

The company said it now plans to operate an average of 23 to 25 horizontal drilling rigs in Permian’s Midland basin for the year, down by one from the midpoint of its prior forecast. It also expects to place 490 to 520 wells on production, below the 500 to 530 forecast in April.

Devon, which operates in Permian’s Delaware basin, forecast capital spending of about $900 million in the third quarter, less than in the second quarter, after one temporary fracking crew was dropped from the basin.

Top oilfield service companies have flagged weakening North American oilfield activity in the second half of the year, though recent strength in oil prices have led some companies to forecast a recovery in drilling and fracking later this year.

Devon maintained its full-year production forecast of 643,000 to 663,000 barrels of oil equivalent per day (boepd), while Pioneer raised its output estimate by 3% at its midpoint to a range of 697,000 to 717,000 boepd.

Pioneer’s second-quarter profit more than halved to $4.49 but beat analysts’ consensus estimate of $4.18, sending its shares 1.2% higher to $227.90 in extended trading.

Devon’s adjusted income fell over 50% to $1.18, in line with analysts’ estimates. The company’s shares fell 2.2% to $52.50.