Shale drillers are planning on production growth with fewer rigs despite a worldwide glut that has sent crude prices to a four-year low.
Companies including Devon Energy Corp. (DVN), Continental Resources Inc. (CLR) and EOG Resources Inc.
(EOG) said they expect to pump more from their prime properties while cutting back in their least productive prospects. That puts the onus on OPEC nations, led by Saudi Arabia, to cut output if they want to stem the slide in global oil prices.
Domestic output topped 9 million barrels a day for the first time since at least 1983, the US Energy Information Administration (EIA) said Nov. 13, Bloomberg reported.
West Texas Intermediate crude, the US benchmark oil contract, sank 18 cents Monday to settle at $75.64 a barrel. Prices fell to $74.21 on Nov. 13, the lowest since 2010.
Industry executives have pinned their hopes on a cutback in international production on Saudi Arabia, the world’s largest exporter and de facto head of the Organization of Petroleum Exporting Countries.
The 12-nation cartel, which has increased its output by more than one million barrels a day since the end of May, will decide at its Nov. 27 meeting whether to curb output.
“We’re in a battle with Saudi Arabia with regard to market share versus U.S. shale oil,” Scott Sheffield, Pioneer’s chairman and chief executive officer, said in the Nov. 5 earnings call.
Shale producers are also victims of their own success. New wells are being drilled faster and are pumping more oil. The same thing happened before the 2012 natural gas bust, when prices fell to the lowest in a decade.
The improvements make the rig count a less reliable measure of future growth. In North Dakota’s Bakken, for example, 191 rigs will add 104,000 barrels a day in December, double the gains made three years ago, according to the EIA.
Even with the addition of 10 rigs recorded last week, the number of rigs drilling for oil in the US has declined by 31 to 1,578 since the week ended Oct. 10.
Global production of petroleum and other liquids will rise to 92.91 million barrels a day in 2015 from 91.95 million barrels a day this year, the EIA said last week.
