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US oil supply likely to increase

Published by , Editorial Assistant
World Pipelines,

Enverus Intelligence Research, a part of Enverus, the leading global energy data analytics and SaaS technology company, has released a new report examining the likely responses by US oil producers, both public and private, to high oil prices and increased concerns about energy security in the wake of Russia's recent invasion of Ukraine. Included are regions that are likely to boost output and identifies the barriers and costs of adding production.

US oil supply likely to increase

“The E&P industry can grow while remaining profitable and environmentally responsible. Private operators have been and will continue to take advantage of the outsized returns, and Enverus believe continued drilling activity increases from large US independent are likely and warranted,” said Farzin Mou, Lead Report Author and Vice President at Enverus Intelligence Research.

Jen Snyder, Co-Author, Managing Director and Head of North America Macro Intelligence Research, added, “Once operators lock in new long-term midstream and services commitments, they are handcuffed with off-balance-sheet leverage during a price downturn. The trajectory of the 2024-25 WTI strip therefore will be an important driver of operators’ 2022-23 capital commitments even if wells earn attractive returns by year-end 2023.”

Key takeaways from the report:

  • Russia’s invasion of Ukraine and the subsequent sanctions on Russian energy fundamentally changed the oil market, highlighting the potential of an increased long-term call on US oil barrels.
  • The US upstream sector already had transformed from one of the least-profitable industrial sectors across the S&P 500 to one of the most profitable, with improved environmental stewardship.
  • Public shale oil producers went from reinvesting nearly 100% of operating cash flow from 2018 - 2020 to less than 35% in 2022 at current strip prices.
  • Private operators are taking advantage of the outsized rates of return and raising their share of horizontal drilling to near-record levels.
  • Large US independents' drilling activity already is up ~15% since November, and Enverus believe continued moderate increases are likely — and warranted — based on pre-war price expectations.
  • Should long-dated prices move over US$90/bbl, another step-change in activity would be justified. The E&P industry can return to strong growth while remaining profitable and environmentally responsible.



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