The U.S. shale patch is bracing for an extended period of weak oil prices and drillers and oilfield services firms are cutting staff and reducing budgets to weather the slowdown in North America's fracking growth.
While U.S. shale production is booming and the Permian continues to set new production records, the pace of growth is slowing as many companies have recently scaled back production growth targets while investors and bankers continue to be skeptical about the shale industry's returns.
Big Oil continues to bet big on the Permian, but many independents have scaled back budgets and production targets, industry executives and analysts tell Reuters.
The biggest oilfield services providers are also seeing the slowdown in shale activity and respond with cost and staff cuts.
In July, Halliburton warned that North American activity is lagging behind international markets, while Schlumberger reported revenue decline of 12 percent in North America in Q2.
"North America land remains a challenging environment. Indeed, E&P operator focus on cash flow has capped activity and continued efficiency improvements have also reduced the number of active rigs and frac fleets-so far without major impact on oil production," Olivier Le Peuch, who is now Schlumberger's new CEO, said in July.
Halliburton has cut 8 percent of its workforce in North America amid the challenging market conditions.
U.S. shale producers need to slow down with production growth and focus more on capital discipline in an oversupplied market, Continental Resources CEO Harold Hamm said last month.
The protracted U.S.-China trade dispute and slowing economies and oil demand growth caused analysts to slash their forecasts for WTI Crude and Brent Crude prices this year to the lowest outlook since 2018, the monthly Reuters poll showed last week. According to 51 analysts and economists, WTI Crude will average US$57.90 a barrel this year, down from the US$59.29 per barrel forecast in the previous survey.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More