U.S. energy companies are taking an axe to their rig numbers, deepening production cuts for the industry that in the last few years made America the world’s number one oil producer, CNBC reports.
Six major U.S. shale producers are expected to shut some 300,000 barrels per day (bpd) of crude for the months of May and June, according to an analysis of the companies’ early communication by Rystad Energy.
“Analyzing communication by Continental Resources, Cimarex Energy, ConocoPhillips, PDC Energy, Parsley Energy and Enerplus Corporation, we estimate that oil production cuts in May and June 2020 could amount to 300,000 bpd, an increase from about 100,000 bpd of cuts projected for April 2020,” Rystad wrote in a report Tuesday.
In March, American producers were still pumping at record highs, according to the Energy Information Administration, even as prices plunged due to the loss of demand from the coronavirus pandemic. The latest weekly government data shows production at 12.2 million bpd in the third week of April, the lowest level since July and a stunning 900,000 bpd less than its record peak of 13.1 million bpd in early March.
Oklahoma-based Continental Resources is taking “the most drastic action thus far,” Rystad reported, forecasting a drop of 69,000 bpd from Continental in April and a cut of nearly 150,000 bpd in May and June. Houston, Texas-based ConocoPhillips has announced some 125,000 barrels of oil equivalent of gross output to be slashed in May, Rystad wrote, “estimated to amount to around 60,000 bpd of oil net to the company.”
Artem Abramov, Rystad’s head of shale research, estimates a further production decline of “900,000 bpd, 250,000 bpd and 400,000 bpd in Permian, Eagle Ford and Bakken throughout 2Q20 respectively,” referring to the biggest shale formations in the U.S., with shut-ins accounting for 60% of that initially.
