A number of pure play specialists in the prolific US Permian region in Texas and New Mexico have trimmed their production and activity targets for this year in the wake of recent turmoil in oil markets that has seen sharp falls in prices.

Delaware basin specialist Centennial Resources was the most recent to go public with plans to make its targets for this year more modest.

In a statement released just before the Christmas holiday period, the company said it is "no longer targeting" its previous output goal of 65,000 barrels per day of oil for 2020 and that it would not pursue its planned addition of 2.5 drilling rigs in 2019 to reach that goal.

The company, which said it was taking action "in light of the current macro oil environment", added that it would release full year 2019 production, capital budget and unit cost guidance in its next earnings release, which is expected late next month.

"The 2019 capital budget will reflect management’s objective of maintaining Centennial’s strong balance sheet," the company added.

The news comes after Parsley Energy said earlier the same week that it would plan to "reduce development activity in 2019 while still delivering healthy production growth."

Parsley said it expects to keep an average of between 12 and 14 development rigs and three and four frack spreads active during 2019, compared to a recent level of 16 development rigs and five frack spreads.

However, even with the step back, Parsley said it expects to spend between $1.35 billion and $1.55 billion for a year-on-year output growth of about 20%.

It said that would amount to 124,000 to 134,000 barrels of oil equivalent per day with oil flows of 80,000 to 85,000 bpd.

Fellow Permian pure-player Diamondback said said it would also scale back its 2019 plans, deciding to immediately shed three units from the 24 rigs currently operating so the company can operate within cash flow.

“Due to the dramatic decline in oil prices, realised pricing in the Permian basin is near levels not seen since the end of 2016 while service costs have increased by 35% during the same time period,” Diamondback chief executive Travis Stice said.

Cowen Equity Research said in a note that Centennial's decision was not surprising given the recent commodity price environment.

"Centennial marks the third E&P in our coverage to take a proactive approach against the volatile macro backdrop and provide thoughts (on 2019)," Cowen said. "Recent investor conversations suggest the company's decision to manage outspend/growth should be welcomed and come as no surprise. Tough choice indeed for a growth company, but again, ultimately this represents the right one."

Weekly

Permian players scale back output targets