Several big trends across the global oil and gas industry are taking hold, and they may offer a glimpse of how the business will look and behave into the next decade.
Oil prices have climbed well above expectations, yet many of the biggest producers have kept spending plans largely unchanged.
Exploration activity has been trending down for years as operators are making smaller discoveries. Despite the need to replenish their reserves with new finds, the appetite for risk is not what it once was, and countries around the world are responding by offering more attractive fiscal terms to attract investment.
In the US, tight-oil output was widely expected to peak this year. Instead, stronger crude prices encouraged a modest increase in drilling and production, pushing US output to a record 13.6 million B/D. Nonetheless, the country’s role as the world’s primary source of supply growth is far from given that the Permian Basin, which represents almost half of US supply, is slowing down. As of July, year-over-year Permian production growth was just 130,000 B/D, compared with annual increases over the same period of about 300,000 to more than 500,000 B/D during much of the basin’s post-pandemic era.
One of the other clear signs that the shale revolution has entered a more mature phase is the slowdown in merger and acquisition (M&A) activity.
