Shale Oil

Despite US shale producers continuing to exercise capital spending discipline despite rising oil prices and demand as they emphasize shareholder returns, output from the Permian Basin is still set to grow next month.

Despite the ongoing rise in oil demand and prices, US shale firms are continuing to show capital-spending restraint and remain focused on lowering costs to boost free cash flow and shareholder returns via increased dividends and stock buybacks.

The independent US oil producer reported average upstream output, excluding Libya, of 1.488MM boe/d in 1Q, which was up 16% from 1Q 2020 output.

Equinor and Hess Corp. have both announced the sale of assets within the Bakken shale play in North Dakota.

According to S&P Global Platts Analytics, drilling activity in the Eagle Ford and Permian Basin shale plays picked up on rising oil prices and demand.

The use of electric fracking (e-frac) equipment within US shale plays remains limited due to the high costs associated with e-frac equipment relative to diesel-powered fracking equipment as US shale producers have severely cut spending in the wake of the COVID-19 pandemic.

Among all the shale formations in the country, the Permian Basin stands out in terms of productivity and export potential.

According to consultancy Enverus, merger and acquisition (M&A) activity within the US E&P space jumped five-fold from $600MM in 1Q 2020 to $3.4B on increasing consolidation within the US shale space.

On March 30, the US oilfield services firm said in a written statement that for the first time, it successfully deployed its "SmartFleet" intelligent fracturing system that provided an unnamed operator in the Permian Basin real-time automated control of fracture placement while pumping on a multi-well pad.

According to the EIA's latest Drilling Productivity Report, US shale oil production is set to decline by 47K b/d from March levels to about 7.458MM b/d, as shale producers continue to show capital restraint in the face of rising prices to maximize shareholder returns.