North American Shale Oil Market Outlook to 2025 - A Technology-Driven Success Story - ResearchAndMarkets.com

DUBLIN--()--The "North American Shale Oil Market: Outlook to 2025" report has been added to ResearchAndMarkets.com's offering.

North America's shale oil is a technology-driven success story; however, it created an oil oversupply that led to an oil price fall of 50%, and an active rig fleet fall of 80% from 2Q14 to 1Q16.

Since 2Q16, spurred by price recovery, drilling activity has more than doubled. Key operational improvements are helping the shale oil industry endure low oil prices in this dynamic market environment. Despite possible short-term constraints of capital/rig/labor availability, the market is poised for a new chapter of growth, driven by activity in the Permian.

This outlook explores the impact of operational improvements on shale oil margins in this lower-price environment, and presents a view of expected growth in drilling and completions, production, rig count, and capex to 2025.

Key Findings

1. US shale oil production will reach ~9 Mb/d by 2025 - US shale oil production will reach ~9 Mb/d by 2025, but production can vary by 5.4 Mb/d depending on oil price scenarios.

2. The Permian's average core breakeven price for 2017 is less than $41/bbl - Low breakeven is enabling the Permian to remain profitable despite well cost increases of 30%.

3. The Permian is experiencing 10x the IP of Eagle Ford and Bakken combined - The Permian's IP growth rate for the past 5 years was 20% compared to Eagle Ford and Bakken (2%), and the Permian has more remaining drilling locations as it is still in the early development stage.

4. Total capex will grow at 25% p.a. through 2021 - Increased drilling and completion activity will require total capex spend to grow to near 2014 spend levels; however, production will have nearly doubled since 2014.

5. Drilling and completions to grow by 20% p.a through 2021 - Under the base Price Recovery scenario (WTI $60-70/bbl from 2019 onward), drilling and completions are expected to grow rapidly at 20% p.a., and production will grow at 12% p.a. through 2021.

What's in the Report?

Shale Oil Market Overview

The US shale oil market is in recovery. WTI has rebounded from its February 2016 low of $30/bbl, and has remained between $45 and $55/bbl since mid-September of 2016. Those prices have driven shale oil rig counts to over 500 rigs - more than 2.5 times the April 2016 bottom of 193.

Several factors enable operators to continue producing in this lower-price environment:

  • high-grading, since ~50% of sub-basins have uneconomic average break-evens at these prices;
  • a 5-day reduction in average drilling days since 2014; and,
  • an average IP improvement of 33% since 2014.

Amongst the remaining economic basins, the Permian stands out - having the lowest break-evens in the market explains why ~75% of shale oil rigs are in the Permian and why there has been such a wave of organic and inorganic (M&A) activity growth there.

Shale Oil Market Outlook

The US shale oil market is projected to see strong growth in the coming years. Under the base Price Recovery scenario (WTI $60-$70/bbl from 2019 onward), the Permian is expected to drive 20% p.a. growth in drilling and completions through 2021. Efficiency gains will have a significant effect on produced barrels per dollar spent - total market spend for drilling and completion will nearly return to 2014 levels, but production will have nearly doubled since 2014. US shale oil production is expected to reach ~9Mb/d by 2025, under the Price Recovery scenario.

For more information about this report visit https://www.researchandmarkets.com/research/kpfw45/north_american?w=4

Contacts

ResearchAndMarkets.com
Laura Wood, Senior Manager
press@researchandmarkets.com
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900
Related Topics: Oil

Contacts

ResearchAndMarkets.com
Laura Wood, Senior Manager
press@researchandmarkets.com
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900
Related Topics: Oil