Industry Update: Continued Production Decline

U.S. shale oil and gas producers are feeling the pressure from the latest panic on the spread of the coronavirus. Impact from the virus has caused West Texas Intermediate to fall below $45 a barrel. In its latest Drilling Productivity Report, released earlier this month, the Energy Information Administration said, “oil production has declined across six of the seven major shale players in the country, by some 21,000 bpd. However, the Permian production is still growing by 39,000 bpd. Good news is for the consumer, prices look to continue to go down whereas the oil and gas drillers feel pressured with the continued slow production “

In the past, continuous growth was the business model. More spending and more exploration in order to find more reserves, which translated into a larger production portfolio. “In 2019, the five largest integrated oil and gas companies—ExxonMobil, Shell, Chevron, Total and BP—spent a total of $88.7 billion on capital projects, down nearly 50 percent from the $165.9 billion they spent in 2013,” a report from the Institute for Energy Economics and Financial Analysis said. “Not since 2007 have the capital expenditures, or CapEx, among the five companies have been so low.” CapEx is capital expenditures such as drilling and completing a well. The oil and gas industry faces a major hurdle, not only the coronavirus affecting production but the decline in demand.

 

https://oilprice.com/Energy/Crude-Oil/Are-Oil-Majors-Facing-A-Terminal-Decline.html

https://oilprice.com/Energy/Crude-Oil/Shale-Drillers-Need-A-Miracle-To-Keep-Production-From-Falling.html

https://mcusercontent.com/14d8055a9f17567db04b7ce70/files/6a350d8a-88c7-4437-a7b0-4d7728091937/EnverusDI_ROCKIES_BAKKEN_IN_FOCUS_FEB2020_PREVIEW.pdf

Written by:
Avatar

Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED “AS IS,” WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.