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DENVER: Major U.S. shale oil producers say they remain focused on shareholder returns, limiting production spending largely to offset higher costs for equipment, supplies and services.

The decision will likely curb increases in oil production while benefiting shareholders receiving higher payouts in the form of dividends and share buybacks with U.S. crude prices above $95 a barrel.

Devon Energy this week increased its capital spending budget by about 6% to between $2.2 billion and $2.24 billion, partly due to inflationary pressures.

It has a $2 billion share buyback authorization in place and said it may seek approval for additional purchases after increasing its cash dividend by 22% from the previous quarter.

Midland, Texas-based Diamondback Energy reiterated its focus on returning free cash flow to shareholders and said it had increased its share buyback authorization to $4 billion from $2 billion. .

It plans to return 63% of its free cash flow to shareholders, exceeding a previous target of 50%.

The shale producer said well costs rose about 15% year over year, with fracking and drilling costs up about 10%. He said lease operating costs rose about 50 cents, to between $4.50 and $5 a barrel, due to rising electricity costs in Texas. It plans to operate 12 rigs and three hydraulic fracturing teams in the second half of the year.

Both companies raised their full-year production guidance, with Devon now forecasting average production of 600,000 to 610,000 barrels of oil and gas per day, up from 570,000 to 600,000 bpd previously.

Diamondback raised its forecast to 380,000 bpd from 376,000 bpd previously.

Devon chief executive Rick Muncrief said he was “not so optimistic” about overall US production growth for the second half of the year, and that he expected even the Permian – largest U.S. production pool – could see moderate growth amid supply chain constraints.