Market "challenged" is the politically correct manner of saying the shale oil industry is as dumb as a box of hammers with regard to its inability to predict world oil markets and help prevent price volatility.
Saudi Arabia said this morning it has had a belly full of the rest of OPEC cheating on its quotas. Russia says its is not going to cooperate with further OPEC (KSA) cuts. The world is up it's shin bones in crude oil and both Iran and Venezuela, representing 3.5MM+ BOPD, are sanctioned and sitting on the sidelines.
What's the US shale oil industry doing in anticipation of lower product prices in 2020? Adding more production as fast as Wall Street will allow it. Its sending rigs to the barn, for the moment, while frac'ing the snot out of DUC's. It's conning the American public, once again, into believing it is being fiscally responsible.
"Rystad Energy analyzed the third quarter 2019 earnings results of around 40 US shale operators. On average, companies decreased their 2019 capital guidance by 0.6% in the third quarter, compared to a reduction of 0.4% registered in the previous quarters. So far in 2019, companies decreased D&C guidance by around 1% relative to their original capital budgets communicated at the beginning of the year.
“With three reporting quarters of 2019 behind us, we can conclude that a number of US producers showed impressive execution this year and continued to increase oil production guidance throughout the year, while remaining at the lower end of capital guidance. Permian players and companies active in multiple plays were especially successful in outperforming their original estimates,” Akulinitseva (Rystad) remarked."
How is the US shale oil industry paying for this continued growth? On credit, of course. By getting further in debt.
Where is all this US shale oil growth going once its out of the ground? Its being exported to foreign countries, 3.6MM BOPD last week. Any further Permian growth will all need to be exported.
What's happening to associated gas from shale oil growth? If it is not getting sold at WAHA for <60 cents per MMBTU its getting flared, enough gas being wasted in the Permian Basin to supply all of Norway's natural gas needs, in fact.
Who's more market challenged that the US shale oil industry? The US shale gas industry. Some low MMBTU stuff sold at the Dominion Hub goes for <80 cents. How's the shale gas business model doing? Not so good.
Whos is charge of this mess, who's looking out after the long term hydrocarbon future of America?
Nobody; our federal government and state regulatory agencies are all out to permanent lunch. Everybody is trying to make a buck, or get a vote, before the roof caves in.