The Mighty DUCs Are Gone

US shale producers face political headwinds, and the uncertainty of arbitrary control of prices by OPEC+ while uncertain demand faces enormous cartel spare capacity. Post-pandemic production growth has come predominantly from completions of drilled but uncompleted wells. The “fracklog” has now been exhausted in all shale plays but the Permian – and all it’s achieved has been flat-line production following the initial surge from the pandemic lows. Today’s high prices for oil and gas are attractive lures for CAPEX investment operators so far has not been willing to make. Those prices are bad news for the party in power, so after the 2022 midterms, the political headwinds could ease. In the meantime, operators who can look outside the US are doing so, and those trapped in the US are taking a wait-and-see attitude. We are lowering our US production forecast for end-2022 from 13 million barrels per day to 12.5 million.