Advanced techniques like hydraulic fracturing and horizontal drilling have made U.S. shale operations extremely efficient. Explorers are now capable of producing more oil with the deployment of lesser rigs. Thus, despite the recent signs of moderation in American oil production growth, the country is poised to become energy-independent by next year.
Shale Drillers to Back US’ Energy Independence
Conservative capital spending by U.S. oil explorers have slowed down drilling activities across the country’s major shale plays. With a drop in rig count, shale resources have been witnessing a decline in crude production growth. In fact, the growth in production will continue to decelerate since most of the analysts are predicting a curtailment in future drilling programs.
Despite the slowdown, the overall production volumes of crude in America will be growing in the coming years. According to the U.S. Energy Information Administration (EIA), from a record annual average volume of 11 million barrel per day (Bbl/D) in 2018, the United States will increase average crude production to 12.3 million Bbl/D in 2019. Also, the annual average U.S. production volumes of the commodity in 2020 will rise to 13.2 million Bbl/D, as estimated by EIA.
Precisely, the prolific shale plays in the United States, especially the Permian Basin, will continue to contribute to the country’s crude production and hence has paved the way for America’s energy independence. EIA added that from an average net import volume of 520,000 Bbl/D of crude oil and petroleum in 2019, the United States will report net export volumes of the commodities at an annual average of 750,000 Bbl/D in 2020.
Oil Industry’s Future Lies With America
Analysts not only expect America to become a net exporter of oil in the years to come but also anticipate the United States to be among the few exporting countries to primarily contribute additional crude volumes to the global energy market. Meanwhile, OPEC projects production decline in its volumes for oil and other liquidsover the next five years. OPEC estimates production of liquids at 32.8 million Bbl/D in 2024, suggesting a decline from the current level of 35 million Bbl/D.
Thus, in the production race for crude oil, the United States will be surpassing OPEC despite the slowdown in America’s shale drilling activities. Precisely, when OPEC is planning to curb its annual average crude production to stabilize oil prices amid the global supply glut, the United States has decided to increase its production share in the global energy market.
Shale Drillers in Focus
America’s intention to continue to contribute additional oil worldwide despite low crude prices reflects the shale drillers’ operational efficiencies. Thus, it is worthwhile to track prospective oil explorers with footprint in prolific shale plays in the United States that include Permian basin, Eagle Ford and Bakken.
We have shortlisted five U.S. shale drillers, each carrying Zacks Rank #3 (Hold), that investors should keep an eye on. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
With the divestment of its Eagle Ford resources, Pioneer Natural Resources Company PXD has become a pure-play Permian stock. The company has estimated more than 20,000 drilling sites in the nation’s most prolific basin which is likely to provide the company with decades of oil production.
Diamondback Energy, Inc. FANG is a pure-play Permian player with presence across more than 394,000 net acres in the Permian. With more than 7,000 drilling locations in the basin, the company is expected to continue to ramp up its oil equivalent production.
Callon Petroleum Co. CPE — is solely focused on the Permian Basin. The company boasts an impressive footprint (86,000 net acres) throughout the region. The company entered the basin in 2009 with around 8,800 net acres and has been strengthening its hold in the region since then.
In the Delaware Basin — part of the larger Permian basin — and Eagle Ford, EOG Resources, Inc. EOG has identified a total of 8,400 undrilled premium locations that are likely to contribute the company with incremental oil production volumes.
ConocoPhillips Company COP derives significant volumes of oil from the Eagle Ford, Bakken, and Permian areas.
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