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Market Chatter: Nigeria Oil Output Hits 1.6 Million b/d as Producers Boost Drilling

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Nigerian oil producers are accelerating drilling plans as the Iran conflict and disruptions to the Strait of Hormuz push crude prices above $100 per barrel, Bloomberg reported on Wednesday.

Independent producers pumping below 50,000 barrels per day are accelerating spending after buying oil assets divested by international companies over the past several years, the analysis said.

Former Exxon Mobil (XOM) manager Wisdom Enang said smaller operators could increase combined production by 200,000 b/d to 300,000 b/d before year-end as tighter global supply boosts demand for Nigerian crude.

Nigeria lifted oil production to 1.6 million b/d in April, marking the country's biggest monthly increase in almost three years, according to the report.

President Bola Tinubu has pushed reforms to attract investment into the oil sector through tax incentives, quicker contract approvals and management changes at the national oil company.

Oando Energy Resources plans to drill additional wells and raise output 30% to 42,500 b/d by year-end after acquiring Eni assets in 2024, Chief Executive Officer Wale Tinubu told Bloomberg.

Tinubu added that the company is accelerating a five-year strategy to double production and benefit from supply shortages created by the Middle East conflict.

Petralon Energy advanced plans for a third well after crude prices moved well above its $65/bbl base-case forecast shortly after the company drilled a second well.

Petralon Chief Executive Officer Ahonsi Unuigbe said additional drilling should increase the company's production 56% to 7,500 b/d before year-end.

Pan Ocean Oil and Newcross Companies, which jointly produce 48,000 b/d, restarted two wells after the conflict began and are using higher revenue to fund expansion projects and reduce debt.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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