Spotlight: Favorable conditions for US shale growth in 2020 hindered by continued capital discipline

Y/Y US shale oil growth is expected to decrease by one-third in 2020 (+0.8 MMB/D versus +1.2 MMB/D in 2019) as a result of continued capital discipline with rigs expected to stay flat at around 600.

Still, we highlight other factors that support growth in 2020.

• Well productivity improvements are slowing, but mostly in the mature Eagle Ford basin. IPs in the Permian and Bakken are still increasing at a solid rate.
• Costs are relatively flat, yielding advantageous well breakevens of around $40/Bbl (WTI) which compare very favorably to the Platts Analytics average 2020 WTI price forecast of $59/Bbl WTI.
• Large DUC inventory of over 4,000 wells and plenty of Permian oil takeaway capacity also support stronger growth in 2020.

Unless oil prices increase significantly in 2020 (not our most likely event), we expect growth to stay depressed by continued capital discipline.

For more insight, please see our Global Oil Current News and Analysis.