As Oil Rises, US Shale Companies Have Begun Increasing Oil Production

Zero Hedge ^ | 4/28/16 | tyler durden

[Nachum]

Three days ago, Pioneer surprised oil market watchers when it not only said that it has already produced more oil than it had initially forecast, but that once crude returns to $50, all systems are go. This is what it said in its Q1 press release:

producing 222 thousand barrels oil equivalent per day (MBOEPD), of which 55% was oil; production grew by 7 MBOEPD, or 3%, compared to the fourth quarter of 2015, and was significantly above Pioneer’s first quarter production guidance range of 211 MBOEPD to 216 MBOEPD; oil production grew 10 thousand barrels oil per day during the quarter, or 9%, compared to the fourth quarter; expecting to deliver production growth of 12%+ in 2016 compared to the Company’s previous production growth target of 10%; the higher forecasted growth rate reflects improving Spraberry/Wolfcamp well productivity; expecting to add five to ten horizontal drilling rigs when the price of oil recovers to approximately $50 per barrel and the outlook for oil supply/demand fundamentals is positive

Then yesterday it was another US shale giant to admit that $45 oil is good enough, and that it is "increasing its production forecast to a range of 131,400 BOE/d to 136,900 BOE/d" adding that "with the majority of completions scheduled for the second half of the year, the Company expects to realize the full production benefit in late 2016 and 2017."

It was not immediately clear if Pioneer and Whiting were restoring production due to recently implemented hedges. What is clear is that as the EIA reports, drilling costs have tumbled in recent years, which suggests that breakeven drilling prices have followed suit.

From the EIA:

EIA report shows decline in cost of U.S. oil and gas wells since 2012

[xzins]

Good on them.

Before Saudi tried to run them out of business what was gas selling at....2.80?

[Nachum]

It’s just a natural progression. They could not get rid of Fracking and so the Saudi/Russian oil dumping did NOTHING and US production is going to come back.

(UP YOURS OBAMA)

[xzins]

Fracking was driving US prices down (world oil per barrel down), and Saudi had enough of it and tried to run them out of business. But I don’t remember when the war began. WAs it 2 years ago?

[MeganC]

I’ll believe this story when my husband gets called back to work in North Dakota.

[txrefugee]

Gotta love the shale wizards, whose shale energy breakthroughs kept this country’s economy afloat during the disastrous Obama Depression. To punish them, Obama made sure the Iranian Sunnis got a fat oil deal in their fat nuclear weapons deal. This broke our domestic oil and gas price,which no doubt pleased Hussein, until the US GDP started tanking.

But Texas and Oklahoma energy producers are coming back, showing their determination and grit. The country owes them some gratitude for bringing our Middle Eastern enemies to the edge of the energy abyss.

[Roccus]

We used to have a FReeper who was very knowledgeable on this subject. Sadly, the malicious stupidity that infested FR this primary season claimed another contributor.

[huckfillary]

This is ECON 101. This is the way the market works. Higher prices and not government intervention will bring producers back into the market. My advice to workers who may be heading back to North Dakota—rent, don’t buy. My advice to everyone—don’t ever believe the conventional BS about “market failure.” In success or failure, the market is working perfectly.

[AlmaKing]

OPEC has a real competitor now. Shale production will continue to get cheaper. If OPEC wants to manipulate the price, US shale production will counter it.

The profitability threshold will vary by shale producer, but all thresholds seem to be well below the Saudi budget threshold of over $100 a barrel.

[AlmaKing]

Yes, that’s sad. Hopefully, he will come back. I always enjoyed the posts and learned a lot.

[Rockpile]

Are you referring to Hackney? Did he get banned?

[Roccus]

thackney and no