U.S. Shale Is Slowing Down Due To Factors Beyond Its Control

U.S. Shale Is Slowing Down Due To Factors Beyond Its Control

Evening shot of an oil drilling rig. The U. S. shale industry is slowing down, and a recovery during the rest of 2023 seems increasingly unlikely due to a variety of factors beyond anyone's control. From its' January 14 peak, the Enverus Daily Count of active North American drilling rigs has now fallen by 20%. Baker Hughes BHI said Friday its own weekly rig count has dropped six straight weeks. One week could be a blip; two straight might be a coincidence; but six straight weeks is definitely a trend. Given the state of other market factors, it's a trend that seems unlikely to reverse itself during the second half of 2023, despite continuing forecasts of better times ahead from some analysts and agencies. What are those other factors? Let's look at a few: It is key to remember that most of the larger shale producers went through the process of deciding their 2nd half 2023 capital and drilling budgets during April and May, when oil and natural gas prices hovered in the same low range we see today. Thus, these budgets, which kick in on July 1, are almost certain to be lower than the 1st half 2023 budgets,