US shale oil output has declined by 3.1% to 7.5 million barrels per day (bpd) in 2020 from 7.7 million bpd in 2019, Rystad Energy estimates.
US shale oil output has declined by 3.1% to 7.5 million barrels per day (bpd) in 2020 from 7.7 million bpd in 2019, Rystad Energy estimates. In 2021 shale oil output is estimated to decline further by 2-3%.
US operators’ D&C capex, which was $98.7 billion in 2019, will more than halve in 2020 to $45.2 billion. Operators’ have now shifted focus towards preserving as much output as possible while implementing capital efficiency measures, which means 2021’s capex is projected to decline 7-9% year on year.
Rystad Energy has also analysed the third quarter guidance of 23 companies, which together account for about 41% of this year’s US shale oil production. Interpreting the companies’ released guidance, their 2021 onshore oil production will likely shrink by 1.9% while D&C capex will be 12.9% lower compared to the group’s stated 2020 plans. When the plans of larger producers and private operators are added to the analysis, capex decline will likely be lower, at 7-9%, and output cuts larger.
‘Amid a second wave of Covid-19 in North America and Europe, and uncertainty related to potential new regulation the industry may face once a new US administration settles in, operators largely remain disciplined. They aim to increase cost efficiencies and spend only the minimum amount needed to prevent next year’s output from declining too much,’ said Alisa Lukash, senior analyst at Rystad Energy.
Permian-focused operators will cut spending by about $1.6 billion, or 16% below this year’s target. Operators with a presence across multiple basins will follow suit, with an $800 million, or 11%, spending decrease. Bakken-focused peers will cut spending by $200 million, or 9%.
Despite the fact that operators in the Permian Basin are leading capex reduction efforts, the group has guided an almost 2% increase in oil output in 2021 compared to 2020. The factors driving this drastic cost reduction per barrel include service cost reductions and the price deflation of components.
