Follow us:
Subscribe to our newsletter

logo

  • News
  • Projects
  • Business and Finance
  • Innovation
  • Products and Services
  • Events
  • Online Magazine
  • Advertise
  • Contact
Home
  • News
  • Projects
  • Business and Finance
  • Innovation
  • Products and Services
  • Events
  • Online Magazine
  • Advertise
  • Contact
Quotes by TradingView

Despite downturn, US shale operators are finding new growth opportunities

25 Nov, 2020
59



Following the early disruption caused by the crude price crash, the US shale industry has gradually started to adapt to the new pricing environment. Since the third quarter of 2020, a series of mergers and acquisitions (M&As) were executed. Consequently, the US shale drillers have developed a renewed optimism and hence, could sense some new growth prospects that may lead to further consolidation in the future, highlights data and analytics company, GlobalData.

GlobalData’s latest report, Unconventional (Oil and Gas) Production in the US Lower 48, 2020 Update’, outlines that the scaling down of investments in the US Lower 48 states has led to the decline in active rig count and crude production in 2020.

Considering 17 major operators, the total capital expenditure (capex) cut sums up to approximately US$38 billion with Exxon leading the cut with US$10 billion, followed by Chevron with US$6 billion.

In percentage terms, Occidental Petroleum adopted the biggest capex cut of 55 per cent for 2020.

Oil and Gas Analyst at GlobalData, Andrew Folse, said the COVID-19 pandemic and the decline in crude prices have severely impacted the drilling activities across all major shale plays leading to decline in production.

“In May 2020, the total crude production across the major US shale plays dropped to as low as 6.3 million barrels per day (mmbd). However, the production has recovered somewhat since then,” he detailed.

As per GlobalData estimates, the total crude oil production across four major shale plays of Bakken, DJ Basin, Eagle Ford, and Permian Basin is expected to remain flat within the range of 7.1 mmbd to 7.2 mmbd for the next 14 months outlook since November 2020.

The current oil and gas downturn has proven to be difficult for many operators, causing many companies to file for chapter 11 due to overwhelming debt and weak liquidity profile.

However, it has also presented an opportunity to the companies to acquire players in distress or merging of both companies to increase the operational scale and efficiency.

The consolidation kick-started by Chevron’s acquisition of Noble Energy for US$13 billion.

This deal was followed by three major announcements – the Devon-WPX merger, the acquisition of Concho Resources by ConocoPhillips and the most recent acquisition of Parsley Energy by Pioneer Natural Resources.

GlobalData states that this new-found enthusiasm may further spur a few more M&As across the US oil and gas industry.

“In all of the recent deals and likely in future mergers, there is a significant acreage in unconventional areas involved, especially in Permian Basin. This basin remains the most attractive acreage in the US Lower 48 and provides very competitive payback periods, measured in months, unlike offshore projects where the payback periods are usually measured in years,” Mr Folse said.

 

Production Comparison from Independent Producers Post (M&A). Source: GlobalData Oil and Gas Intelligence Center.

Related Articles

Total withdraws from the American Petroleum Institute

Researchers trace geologic origins of Gulf of Mexico ‘super basin’ success

Share of gas flared in Permian falls to record low levels

Research reveals how to improve natural gas production in shale

Comments

Leave a comment Cancel reply

You must be logged in to post a comment.

all news all projects

Latest Posts

  • Latest News
  • Latest Projects
21 Jan

New agreement secures competitively priced gas for the east coast

20 Jan

Resilience and sustainability key themes for industry in 2021

19 Jan

IEA calls for urgent action to reduce methane emissions from sector

19 Jan

Have your say on the 2021 Acreage Release

18 Jan

New system to advance predictions in engineering

21 Jan

Woodside inks hydrogen MOU with Tasmanian Government

19 Jan

Origin reports discovery at Kyalla

18 Jan

Kumul Petroleum awards design and development contracts for FSRP facility

15 Jan

Apache and Total announce new oil discovery offshore of Suriname

15 Jan

Equinor, YPF partner with Shell in block offshore of Argentina

Online Magazine

    Current Cover
  • Login
  • Subscribe

Subscribe

Subscribe to our newsletter or print magazine
All Products and Services

Products and Services

Our Titles

  • Home
  • Contact Us
  • Terms and Conditions
  • Privacy
© Sage Media Group 2021 All Rights Reserved.
×
Authorization
  • Registration
 This feature has been disabled
 This feature has been disabled until further notice, however you may still register
×
Registration
  • Autorization
Register
* All fields required