Upstream oil and gas—industry-speak for the exploration and production end of the business—has always been a game of geology, timing, and money. Right now, U.S. oil majors are holding the better hand in the world of E&P. And the reason is simple: they’ve got the Permian, and Europe doesn’t.
According to Wood Mackenzie, crude and condensate production across the U.S. Lower 48 has hit an all-time high of 11.3 million barrels per day, but is on the cusp of peaking. They forecast output will start a slow decline by year-end, dropping by 500,000 bpd by 2027. But for ExxonMobil and Chevron, who dominate the Permian Basin, the story is different. Their growth runway is intact—and profitable.
This divergence in fortune comes just as global demand projections are muddying the waters. OPEC’s latest World Oil Outlook sees global oil demand hitting 123 million bpd by 2050, requiring $18.2 trillion in new oil and gas investment. The IEA, by contrast, insists demand will peak before 2030. But regardless of who’s right, no one’s arguing that Permian oil is uncompetitive. With oil major breakevens below $45, according to WoodMac, along with WTI and ultra-low carbon intensity, the Permian is the upstream gift that keeps on giving.
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WoodMac expects ExxonMobil’s Permian output to rise 55% to 2.3 million boe/d by decade’s end, holding steady through 2040. Chevron is expected to churn out a 25% increase, to 1.2 million boe/d by 2030. In both cases, the Permian will supply nearly a third of total output—onshore, low-cost, and infrastructure-rich. It’s not just scale—it’s resilience. Even as the broader U.S. rig count drops (down 7 last week alone, to 544), these majors are using AI and advanced analytics to keep well costs low and recovery factors trending up.
Goldman Sachs recently declared the U.S. shale boom years officially over. But that misses the nuance. Yes, the easy growth is gone. But for majors with prime Tier 1 acreage and deep capital pools, this isn’t the end—it’s the monetization phase. The focus now is on harvesting cash, not chasing barrels.
What makes the Permian such a strategic fortress isn’t just its size—it’s the rare combination of geology, infrastructure, and optionality. With thousands of drilled-but-uncompleted wells, ample takeaway capacity, and unmatched midstream connectivity, operators can toggle activity up or down faster than anywhere else on earth. That responsiveness gives U.S. majors a tactical edge in volatile markets. And as capital discipline replaces boom-era exuberance, it’s the companies with scale and flexibility that will win. The Permian isn’t just a resource—it’s a lever for navigating the next two decades of uncertainty, and Exxon and Chevron are the only ones strong enough to pull it with confidence.
European majors—BP, Shell, TotalEnergies, and Equinor—face a different calculus. Shell sold its Permian assets in 2021. BP and Shell have largely flat production outlooks, Woodmac says, hamstrung by underwhelming exploration and a delayed strategic pivot back toward upstream. By contrast, TotalEnergies and Equinor are actively building their U.S. Lower 48 positions, especially in gas, complementing their LNG portfolios.
TotalEnergies has stitched together a respectable gas footprint in the U.S. through recent M&A. BP’s Lower 48 output is around 440,000 boe/d, about one-fifth of its global total. But they’re still playing catch-up in the Permian oil race, and entry now comes at a premium—if you can find an entry point at all. As WoodMac notes, post-consolidation, high-quality opportunities are scarce.
That’s what makes the U.S. majors’ position so strategic. The Permian offers flexibility, scale, and adaptability in a way no international play open to IOCs can match. And as gas demand rises to fuel AI-driven electricity needs and LNG export growth, the associated gas volumes from the Permian are another tailwind—especially given their near-zero breakeven costs.
For the EuroMajors, the challenge now is clear: make the most of what’s left on the table. That means doubling down on exploration, being opportunistic with M&A, and rethinking upstream as a long-term value driver—not just a bridge to renewables. TotalEnergies and Eni have made headway here, with exploration-led growth and diversified portfolios. Shell and BP? They’re late to the pivot and low on leverage.
In the race to stay relevant in a stronger-for-longer oil world, unless Europe’s biggest players get bolder, the gap between US majors and Europe’s is only going to widen.
By Julianne Geiger for Oilprice.com
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