Self Imposed Discipline
US crude production has averaged this summer some 600,000 bpd above the level seen in summer 2020. However, on an annual average basis, US crude output in 2021 is still likely to average at slightly lower levels compared to 2020, in part due to disruptions caused by Hurricane Ida. Another key factor why the US is not seeing a greater increase in output is the impressive cash-flow discipline shown by public US shale operators. They have moved away from expanding production to debt reductions and dividend growth after years of disappointing financial results. The CEO of Pioneer Natural Resources, the single biggest oil producer in the Permian basin shale, expressed an opinion that shale producers are likely to keep using rising cash flows to pay shareholders and not fund new drilling, despite the upward trend in oil prices.
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