US Shale Producers Eye New Chapter

US Shale Producers Eye New ChapterUS Shale Producers Eye New Chapter

Two years into the worst oil price rout in a generation, large and midsized US independent producers are surviving and eying growth again as oil nears $50 a barrel, confounding OPEC and Saudi Arabia with their resiliency.

That shale giants Hess Corp, Apache Corp and more than 25 other companies have beaten back OPEC's attempt to sideline them would have been unthinkable just months ago, when oil plumbed $26 a barrel and collapses were feared, Reuters reported.

To regain market share, the Organization of Petroleum Exporting Countries in late 2014 pumped more oil despite growing global oversupply. It aimed to drive prices lower and force higher-cost producers out of the market, with shale oil seen as especially vulnerable.

The pain was acute. Industry revenue fell more than 30% in 2015 from the previous year, the US drilling rig count dropped by more than 70% from when oil was still above $100 per barrel, stock valuations plunged and scores of small producers filed for bankruptcy. But so far no US producer that pumps more than 100,000 barrels per day has gone bankrupt. The survival of these big producers partly explains why overall US production has slipped only about 10% since peaking at 9.69 million bpd.

Their agility, which required slashing costs in half while doubling down on improved techniques to squeeze more oil from each new well, is now allowing the industry to cautiously focus on growth again.