Negative consequences of savings: oil and gas drilling activity in the US is growing

After an incredibly successful year for the shale industry last year, the US production industry is experiencing decline and stagnation. The records were not in vain - many deposits have been depleted. In turn, considered successful policy Last year’s “capital discipline” led to sad and negative consequences this year.

Now, unlike last year, in order to maintain profits and production levels (even far from record levels), producers have to make forced expenses and invest in exploration, production and drilling.



The process is slow and reluctant, reflected by the reluctance to develop the industry, but only to pump it out and make a profit. In order not to lose the entire industry at once, you have to spend money, writes Baker Hughes.

Over the entire previous week, the total number of drilling rigs in the United States increased by only two units. Taking into account the fact that for almost a year and a half their number has only been decreasing, even such a slight increase symbolizes a tendency to change the strategy of shale producers.

Meanwhile, U.S. crude oil production remained unchanged for the sixth week in a row, averaging 13 million barrels per day. This is 200 barrels below the all-time high of 13,3 million reached last December. If investment does not increase and drilling activity does not intensify, the shale industry will not be able to maintain this level of productivity. Then all the achievements and advantages of 2023 in the fight against OPEC+ will be lost. Competitors will quickly take over market share and surpass them in terms of profitability.

Even rising oil prices cannot change the situation. The cost of raw materials, which remained at a multi-month low for a long time, could not stimulate investment in drilling. And a rising price destroys demand, making an increase in production (especially financing the growth of pumping) unprofitable and undesirable.

Therefore, now American oil companies are faced with a difficult choice - the time has come to wait for changes in the market, for calm. But shale companies are forced to spend when it is most unprofitable just to maintain their business.