With oil prices around the mid-50s, more than three quarters of U.S. shale E&P companies are unable to cover capital spending from operating cash flow. Because, as Rystad Energy ShaleWellCube notes, the well-head break-even prices for 2018 were on average too low for comfort at Eagle Ford $47.68; Bakken at $44.13; $42.76 in the Permian Midland and $37.94 in Permian Delaware. The decline in U.S. West Texas Intermediate (WTI) crude futures from a near four-year high of $76.90 Oct. 3, 2018 to a one-year low of $53.76 Jan. 18 has hit the over-leveraged independents hard. In addition, the industry faces rising competition if President Trump expands drilling rights in Federal lands and offshore.
The decline of more than a third in U.S. West Texas Intermediate (WTI) crude futures since the autumn owes much to record output from Saudi Arabia and Russia, a response to rising oil prices and encouragement from the President. On Nov. 21, President Trump publicly praised Saudi Arabia and encouraged the downward price trend, saying, “let’s go lower,” broadcaster CNBC reported. Meanwhile, thanks to gushing oil wells in the Permian shale basin, the United States became the world’s largest crude producer at 11 million barrels a day, according to the EIA.