While the OPEC+ group discussed historic output cuts last week,
independent US oil and gas producers kept lowering their capex and
activity for financial reasons as a response to lower oil prices. Last week we saw US horizontal oil drilling falling 20% from the mid-March peak,
a record-fast decline for a three-week period. Activity has now shrunk
by another 45 to 50 rigs, which brings the drop from the peak to 26%
within four weeks.
Such a low rig activity level is already
substantially below the maintenance activity requirement for the US Land
region with a six- to nine-month horizon. Regardless of ongoing output
shut-ins, US Land has now lost its production growth momentum. A rebound
in rig activity will be needed if oil prices recover for US Land to
enter a renewed production growth phase in the future.
https://www.rystadenergy.com/newsevents/news/newsletters/UsArchive/shale-newsletter-apr-2020/
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