The US shale patch is holding back on big production boosts despite bumper profits and surging crude prices, as executives seek to avoid being punished again for responding with rapid investment. although US crude prices have doubled in the past 12 months, the number of operating oil rigs — just 373 last week, according to Baker Hughes — remains well below levels of recent years. US oil production is languishing almost 15 percent beneath last year’s record high near 13m barrels a day.
Industry observers and insiders had expected a rapid recovery from the US shale industry. Now tepid spending and sluggish oilfield activity could leave supplies short as demand recovers.”We are underinvesting as an industry around the globe,” said Rick Muncrief, chief executive of Devon Energy, one of the largest US shale producers.
Devon has nevertheless pledged to hold production flat this year and cap any growth in 2022 at just 5 percent — less than half the annual pace across the shale patch in the three years of bumper output rises before the pandemic.
After years of outspending, Devon is among the shale groups that have pledged to use windfalls from higher prices to strengthen their balance sheets and return capital to investors through dividends or share buybacks.
“The days of needing to grow [production] at double-digit rates, that’s behind us,” Muncrief told the Financial Times. “The industry has overbaked too many times.”