For the first 10 years of the shale revolution, it was a foregone conclusion: high prices spurred more drilling, and more drilling meant more production. It worked both ways. When prices fell, so did production. The correlation was great. Relations were on point in 2014-15, when $100/bbl crude crashed to $30, recovered to $60 in 2019, and was wiped out in 2020 when the COVID crisis hit. But then the market changed. As prices rose in 2021, eventually to astronomical levels in 2022, the phenomenon of producer discipline began, with E&P curtailing their drilling programs and returning a significant portion of their growing free cash flow to its shareholders. The short-term market implications of this new dynamic have been widely documented in the RBN blogosphere. But what does it mean for the future? Especially for intrepid energy analytics companies (like RBN) who, by necessity, must project producer behavior far into the future to determine what production will look like next year, next decade, and even beyond on the horizon In this new RBN blog series, we’ll examine this dilemma, the assumptions RBN makes, and what our forecasts look like for the coming years.
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Download Free Forecast! Interested in the details of RBN’s crude oil forecasts? You have come to the right place. There is a link at the bottom of this blog where you can click and download our basin-level forecast for monthly crude oil production over 2023-28 (along with history to 2018). And the best part, to quote Houston’s Mack Mattress, is free! Free! Free! Just make sure you are logged into the website. |
As we said a Long and strange journey In 2018, the rotating rig count, compiled weekly by Baker Hughes, has long served as a barometer of operating and production interest in increasing, maintaining or reducing production, usually with a lag of several months in response to changes in crude oil (and natural oil). gas prices). Last year, a I can’t go for it (I can’t do it), we noted that the rig count/oil price relationship appeared to be breaking down, that the rally in oil prices no longer heralded that drilling activity and production would soon follow suit. This breakdown of the old order was confirmed every quarter in producer earnings reports: time and time again through 2021 and 2022, E&P said they were holding back on investments in incremental production and instead increasing their dividends and share buybacks. Then, a couple of months ago, a Moneywe stated that the 40 US producers we regularly monitor in the RBN blogosphere have “drastically shifted strategy from growth to cash flow generation.”
