Think About This
INVESTMENT RESEARCH
US OIL PRODUCTION
Million barrels per day
14 12 10 8 6 4 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Lower 48 Production Alaska Production
Sources : Bloomberg , EIA , Deltec
In fact , the utilization of DUC ’ s is taking place at an unprecedented rate , falling from a peak of 8,900 in June 2020 to under 5,400 wells , the lowest for any month since November 2017 . The completion rate , the ratio of wells completed ( ready for production ) to newly drilled wells , equivalent to the rate at which inventories are being consumed , which historically averaged 97 %, jumped to over 150 % in 2021 .
US CRUDE OIL & NATURAL GAS RIG COUNT
1800 1600 1400 1200 1000 800 600 400 200
0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
US Crude Oil Rotary Rig Count US Natural Gas Rotary Rig Count
Sources : Baker Hughes , Deltec
Our view is that inventories are now uncomfortably low , so shale producers will have to ramp up drilling to maintain current production rate . They will have to lift drilling even further if they want to rebuild inventory . This gives us visibility and good comfort . US onshore oil producers are not going to spoil the party . In their Q3 2021 press releases , two of the largest oil field services companies , Halliburton and Schlumberger , expressed optimism that these conditions could trigger multiyear capital spending , but we simply have not seen it yet .
If the supply isn ’ t coming from the US , then where ? OPEC + Russia ?
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