RE:RE:Rig counts continue to drop, Shale growth stallsTrue, most rig declines have been in gas plays.
Production volume changes normally lag the rig counts by 4 months. Nowadays a bit longer due to shortages of material, equipment and labour, and the low DUC inventory as a buffer.
Shale production is at a plateau, then should start dropping as a result of the declining rig counts starting a few months ago, and the shale well steep decline rates. This at a time when global oil prices start to get a bid into the second half.
A quick response in US shale oil production from higher prices won't happen. This is due to new capital discipline policy of nearly all producers, and a simple lack of rigs and equipment, now running at very high utilization rates.
After a decade of expoitation, first tier shale acerage is nearly exhausted, and new wells on the whole are experiencing less oil and more gas, affecting oil productivity per well on a per meter basis.
They are starting to drill longer horizontals and between wells as infills, but that also increases well costs substantially.
With higher gas amounts there is more condensate, which is not WTI, but must find another market.
One must look at the liquids production figures carefully to distinguish the difference, and deduct the condensate to see the true oil picture.
As a swing producer, US shale is dead in the water, unlike before.
PabloLafortune wrote: Unlikely to have any effect at all on oil prices - literally a drop in the bucket. most of rig drop are natgas rigs due to low natgas (and NGL) prices which also impacts ROI on many Permian plays. Once natgas, NGL and oil prices recover in next 1-6 months, Permian rigs will go right back up. Its all about global demand, SPR and OPEC plus supplies.