“It is a sign that many US producers see an end to the oil bust and want to bring their operations back to full force faster than their competitors,” analyst Jonathan Wolff told The Wall Street Journal earlier in August.
“Devon Energy Corp., Pioneer Natural Resources Co. and other prolific shale producers are telling investors that this fall they will pour more money into drilling new wells,” the newspaper said.
“The burst of activity shows the resilience of American energy companies that managed to survive oil’s plunge from over $100 a barrel in June 2014 to less than $30 earlier this year,” it said.
It noted that Devon is boosting its 2016 spending by 20% to as much as $1.3 billion, with plans to add up to seven rigs in Oklahoma and Texas.
And Pioneer, one of the biggest drillers in West Texas, bumped up its budget by 5%, to $2.1 billion, and plans to put five rigs back to work, starting with one in September. The new oil will help feed Pioneer’s output projection that it can pump up to 17% more in 2017.
However some experts questioned by the newspaper think that the success of the US shale business is not as big as is being portrayed.
The chief analyst of the Moscow-based Promsvyazbank, a privately owned Russian bank, Ekaterina Krylova noted that there is only a number of companies who are getting ready to boost the production.
The overall tendency is that there are not many of them and the shale oil productions is actually going down.
“Out of all shale oil deposits the production is going up only at The Permian Basin,” she told the website, citing the US Energy Information Administration.
The analyst noted that while the production there grew by six per cent according to July data, the US Energy Information Administration’s estimates suggest that it will slow down to three per cent in September and will further decrease by year end.
Dmitry Lukashov, an analyst at IFC Markets has told the newspaper that the recent activity of some shale producers is “just the usual fuss.”
“According to US Energy Information Administration’s forecast, the general shale oil production in seven of the US major regions is expected to decrease by 85 thousand barrels per day in September, in comparison with the production in August,” he told the newspaper.
However he noted that the production at the new wells will increase by approximately 18 thousand barrels per day.
He also said that such a forecast allows investors to suggest that when the old wells will be substituted by the new ones, the overall production will get increased.
Chief analyst at Vygon Consulting, Maria Belova suggests that the production will increase due to the readiness of the companies to work under low oil prices.
“Many companies operated at a loss even under lower oil prices, to provide minimal cash flow in order to be able to service their old debts and making new ones. And the current oil price around $50 per barrel makes the investments into shale projects even more attractive,” she suggested.
