The new normal?

Nymex WTI crude futures have only settled above $50/bl for four days this year. That’s been enough to spur a few US independents to announce mergers, increase capital outlay and step up drilling activities.

Crude futures have nearly doubled from the lows below $30/bl seen in the first quarter. Decisions by a handful of producers like Marathon Oil and Pioneer Natural Resources to loosen the purse strings points to the resilience of the US unconventional industry and shows how far the sector has come in terms of lowering costs and improving efficiency.  Continue reading

All eyes on Permian

As US crude prices breach $50/bl, all eyes are on the Permian basin, the Texas/New Mexico oil field that is most likely to lead a step up in drilling activity. The Permian is the playground for some of the most resilient US shale operators, such as Pioneer Resources and Occidental Petroleum.

Rig counts have fallen in the Permian basin during the price downturn, but it has stood out as one of the most resilient basins. The rig count in the Permian dropped by 39pc from 233 a year ago, compared to a  72pc drop in Texas’ Eagle Ford shale (to 29 rigs) and a 71pc drop in the Williston basin in North and South Dakota, (to 22 rigs).   Continue reading

Per aspera ad astra

Chevron and ExxonMobil have a lot in common as the two remaining US-based oil majors. But both have reacted very differently in the face of plummeting crude prices.

To see two different paths in the face of adversity, look no further than the latest earnings results from these two.

Chevron has followed some of its European peers in announcing a sharp cut to capital expenditure (capex) next year and plans for thousands more job cuts. In contrast, ExxonMobil has for the most part held its course.  Continue reading

Cutting to the bone

If one were to sum up US independents’ mantra from the most recent round of earnings calls in five words, they would be: cuts, cuts and more cuts.

A year of weak crude prices and expectations that markets will stay lower for longer are leading producers to prepare for a further drop in output in 2016 as they continue to cut spending, pull back on drilling and increase asset sales to shore up their balance sheets.  Continue reading