Rystad Energy: US shale producers cut budgets, boost output

March 1, 2019
US shale companies expect to deliver an average of 15% growth in oil production in 2019 vs. 2018. At the same time, operators say they will cut capital spending by 5% this year. Rystad Energy has analyzed the recently released earnings reports for the fourth quarter of 2018 from 45 US operators, which also included their guidance for production and capital expenditure in the year ahead.

US shale companies expect to deliver an average of 15% growth in oil production in 2019 vs. 2018. At the same time, operators say they will cut capital spending by 5% this year.

Rystad Energy has analyzed the recently released earnings reports for the fourth quarter of 2018 from 45 US operators, which also included their guidance for production and capital expenditure in the year ahead.

“Earnings and guidance confirm that most US shale operators aim to moderate drilling and completion activity this year, prioritizing cost discipline over aggressive growth,” said Artem Abramov, Rystad Energy partner.

The numbers look different if planned 2019 oil production is compared to the reported oil rate in the fourth quarter of 2018. On average, yearend 2018 production rates for US onshore-focused companies was markedly higher than average for the whole year.

“On average only 5% growth in oil volumes is expected throughout 2019, as just a handful of shale operators anticipate double-digit oil production additions vs. the last quarter of 2018. In fact, a number of shale players estimate a decrease in oil output versus the fourth quarter of 2018,” Abramov said.

Still, 5% growth for full year 2019 vs. the fourth quarter of 2018 means 10% growth between the fourth quarter of 2018 and the fourth quarter of 2019.

“If this growth rate is representative for the entire 9.5 million b/d oil output currently achieved in the Lower 48 states excluding [the] Gulf of Mexico, we are then talking about nearly 1 million b/d of oil production growth from the US,” Abramov said.