Austin, TX – Drillinginfo, the leading energy SaaS and data analytics company, has released its latest FundamentalEdge series report, Restructuring Expectations. The report confirms the US remains on track to surpass Russia as leading global producer of crude oil by the end of this summer and drills down on what the current $65/Bbl price environment means for the industry and its investors. Restructuring Expectations also provide analysis on tariffs, OPEC compliance quotas, anticipated dry gas production increases and breakevens, LPG exports, as well as the continued impact on coal plant retirements and fuel switching.
“The new mantra within the oil and gas industry is exercising capital discipline by not spending more than their cash flows,” said Rob McBride, Senior Director of Market Intelligence at Drillinginfo. “This new self-funding principle runs parallel with smart growth strategies, decreasing leverage, and returning cash to shareholders. We’re pleased to showcase who that is in this report,” said McBride.
Key Takeaways from Drillinginfo’s latest FundamentalEdge report:
- Short-term dynamics are bullish and keeping commodity prices at healthy levels. Longer-term, demand is the limiting factor and will keep a ceiling on production growth and prices.
- Natural gas price expectations in 2019 and 2020 have been revised down and are now expected to average $2.60 per MMBtu. After 2021, gas prices are expected to return to a range of $2.65-$2.80 as LNG facilities, the lead contributor of gas demand, are placed in-service.
- For NGLs, the majority of production growth is expected to come from the Permian due to superior economics and proximity to market. We are likely to see the recent strength in prices continue for the next couple of years as several steam crackers come online, and pipeline capacity gets built to transport more liquids to export facilities and grow the US export market.
After Q1’18, oil and gas exploration and production companies are focused on living within cash flows, returning cash to shareholders, and reducing debt. Recent price increases have not yet prompted producers to increase 2018 capital plans after the first quarter, but we may see producers increase expenditure guidance for the second half as they look to capitalize on high prices – while battling service cost increases in the field.