Upstream oil and gas producers in the US are trapped in a dilemma they might have previously thought would be desirable: abundant production at low cost.
For decades, higher production from oil companies was what the market wanted and rewarded. If producers had to borrow and overspend to do it, the attitude was “c’est la vie”. But in the last couple of years, it has become clear that what is desired, often voiced and certainly rewarded, is slower production growth and reined-in spending.
Capital discipline has been the watchword among upstream producers and Wall Street alike for at least 18 months. That could help brake production growth this year, along with small decreases in well productivity and efforts to return more capital to shareholders.
Increases in US unconventional production