US Oil Producers Signal Modest 2027 Spending Growth, Mizuho Finds

U.S. oil and gas producers are signaling modest growth in capital spending for 2027, adopting a disciplined stance as they begin the budgeting season in a volatile price environment. The outlook emerged from investor meetings with 19 companies hosted by Mizuho Securities on Monday, which included integrated majors, upstream producers, and midstream operators.

Upstream Spending Remains Cautious

Exploration and production (E&P) firms are forecasting spending increases in the low- to mid-single-digit range for 2027, according to Mizuho. This conservative approach comes as the fiscal year 2027 oil strip stood at approximately $79 per barrel as of Monday. Mizuho noted that modest service cost inflation is being largely offset by operational efficiency gains, allowing for disciplined growth.

The investment bank's discussions included major operators such as Exxon Mobil, Chevron, Occidental Petroleum, Devon Energy, ConocoPhillips, and EOG Resources. The report highlighted a split strategy among producers, with some favoring measured growth while others plan to maintain current activity levels, focusing on sustaining capital with low-single-digit production increases.

Midstream Signals More Robust Growth

In contrast to the upstream sector, midstream operators expressed confidence that fiscal 2027 could see another year of heightened growth capital spending. Targa Resources' recent agreements with Exxon Mobil are reportedly prompting other producers to seek comprehensive midstream solutions in the Permian Basin.

Ad

Separately, Mizuho's analysis suggested that refining margins, or "cracks," may remain elevated for 12 to 18 months even after a potential geopolitical peace deal. This indicates a potentially sustained period of profitability for the refining sector.

Company-Specific Developments

Mizuho also provided updates on several individual companies based on the meetings:

• Devon Energy (DVN): Indicated optimism about completing its asset rationalization plan in the fall.
• Enerplus (ERF): Expressed confidence in announcing a new CEO by its third-quarter 2026 earnings call and has hedged approximately 55% of its fourth-quarter and first-quarter volumes at prices above the current strip.
• Callon Petroleum (CPE): Is reportedly making progress on plans to unlock value from its minerals portfolio while targeting improvements in drilling and completion costs.