Shale Oil

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The Death Of U.S. Shale Has Been Greatly Exaggerated

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The current year marks the 15th anniversary of the U.S. shale boom, a period in which fracking technology across such states as Texas, Colorado, New Mexico, North Dakota, and Wyoming helped establish the nation as a top oil and gas producer. Unfortunately, high costs of production compared with conventional drilling has led to the sector consistently printing red ink and resulted in considerable destruction of shareholder value. The Covid-19 pandemic and subsequent oil price crash has led to investors souring on the industry further, credit becoming harder to come by, and a cross-section of Wall Street calling the end to the sector.

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Shale Well Timetable

Weakening Shale Productivity “VERY Bullish” For Oil Prices

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After years of improvements in drilling techniques and impressive “efficiency gains,” there is now evidence that the U.S. shale industry is reaching the end of the road on Well productivity.

A report earlier this month from Raymond James & Associates finds that the U.S. shale industry may be struggling to achieve further productivity gains. If these improvements begin to fizzle out, it could result in “an inflection point in future global oil supply/demand balances,” the investment bank said.

Oil well productivity is “tracking WAY below our model,” analysts Marshall Adkins and John Freeman wrote in the report. They note that U.S. oil production is up less than 100,000 BPD over the first seven months of 2019, compared to the 600,000-BPD increase over the same period in 2018.

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