US Shale Production Is Ramping Up In The Next Two Years
This is part of a full story called Does The US Permian Basin Have A Real Future? in Areas & Producers
Two key events in US shale industry were reported this month.
- Drilling for shale gas is to increase despite lower active drillers,
- A merger between Patterson-UTI and NexTier Oilfield Solutions was completed that gives the industry a leading provider of drilling and completion services.
The focus on the Permian Basin is part of a larger interest in the future trends related to North America industrials. The industrials are really making a comeback in this region, particularly mining in Canada and construction in the United States.
But it’s also become clear to me that energy production investment across the board are playing the biggest role in both the United States and Canada during this industrial push. And that’s where we dive into the Permian Basin as an important fact of the United States (and Canada’s?) future industrial policies.
Does The US Permian Basin Have A Real Future?
With so much happening in oil and gas recently you might have missed this recent news about two United States-based oil and gas companies: Patterson UTI Enegy and NexTier Oifield Solutions merged in a $5.4 billion deal.
This merger brings together two of the lesser known oilfield services companies. Patterson UTI Energy specializes land drilling while NexTier is reputable for its well completion operations. The deal is expected to finalize by the end of 2023.
This merger reveals that oil and gas drilling activity in the United States is likely to pick up over the next few years, at least, until the prices of oil and gas become less volatile or demand stops growing.
When this merger finalizes, it will be a major force in the oil and gas sector of the United States, as most of the supermajors are focusing on offshore markets in developing countries.
In related news, Berkshire Hathaway has once again increased its stake in the Permian Basin oil and gas producer Occidental Petroleum (OXY).
This brings their overall investment stake in the company to 24.4%.
Warren Buffet’s company has increased shares in OXY since the company acquired Anadarko Petroleum Corporation in 2019.
This is a big story in stock market and financial news, as it revealed a much bigger focus on energy equities and an overall bullish environment for capital investments in the energy sector, especially in oil. However, it must be taken into consideration how much of an impact China and India will have on global oil markets. They are the biggest importers of Russian oil. But they are also competing for global industrial production capital and foreign direct investments (FDI) vis-a-vis one another.
That’s why the increased attention put on the United States’ oil and gas production markets are only one part of the story: it is not necessarily the driving factor for global energy markets. This is evident in the decision of OPEC+ to decrease their oil production output in spite of competition from US oil and gas production.
Read the full analysis in Areas & Producers: Does The US Permian Basin Have A Real Future?
