Tight oil output expected to decline in 2016
Unless change happens soon, low oil prices will continue to overwhelm tight oil producers, writes Justin Jacobs
While US tight oil output has been more resilient than many expected, production clearly peaked in April this year and has been in steady decline since. Expect those declines to accelerate heading into 2016 unless there is a quick reversal in the oil price, with shale output likely to fall more than 1m b/d from the April peak of close to 5.4m b/d. A steady flow of cheap financing and strong drilling efficiency gains have been the pillars of the shale industry’s strength – but both are giving way. Shale spending is down sharply this year, by about 30%, but continued access to low interest and plentiful capital has allowed companies to continue to pile on debt to keep drilling. So for all the
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