Today I posted my two-hundred-and-fifth YouTube video.
This week’s Trend of the Week: U.S. Oil Production is Not Rising as Expected. Oil prices have averaged $100 per barrel over 2022–a figure that would normally lead oil companies to expand production and capital spending, but it hasn’t this time. According to the Energy Information Administration, U.S. oil production is only up about 3% from December 2021. Projections had the U.S. at 12 million barrels a day by the end of this year, but we’re currently only at 9.77 million barrels a day. Why is the production not going up? Oil shale fields deplete faster than traditional fields and we may have reached peak production in some of these oil shale basins. The best properties may have been exhausted and we’re now seeing companies move to their more inferior properties. The drilling and fracking may be happening at a steady pace, but we’re not getting as much out of the wells and properties currently being drilled. Companies that had a stock of drilled, but uncompleted have now worked through those “spare” wells and don’t have the motivation to drill new ones as Wall Street and investors would prefer high dividends instead of capital spent on a commodity that has an unclear future. The two oil companies I would look at are Pioneer Natural Resources Company (NYSE: PXD) and ConocoPhillips (COP) because of their mix of resources.
Here’s the link:
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