We’ve been on quite a ride since the U.S. tight oil boom took off a decade ago.
In fact, you can say that drillers in the Lower 48 have exceeded expectations.
Back in 2013, the EIA never saw U.S. crude output topping 8 million barrels per day. I told you at the time that our tight oil plays would drive production higher.
Today, more than 9.3 million barrels of oil are being extracted from U.S. fields every day.
And the general consensus right now is that next year, the United States will break its previous production record of 10.44 million barrels per day, which was set back in November of 1970.
Personally, I wouldn’t be surprised if we blow past that record before we ring in the New Year.
So, like I’ve said… we’ve come a long way.
Yet in today’s low price environment, there’s just one thing missing for those drillers: profits.
Burning Cash
The last few years in the oil market have seen a major shift from spending fast to saving every penny.
When prices were back in triple digits, it was easy to portend the land rush that ensued, as companies were in a frenzy to buy up as much acreage as possible, with the hopes of drilling every last inch of it they could.
Well, you’ve got to spend money to make money, after all.
As you can expect, the name of the game changed once prices started plummeting. It’s more than simply where a company is drilling; it’s about efficiency.
In each of the top oil-producing regions in the U.S., new well production has surged since 2014.
Yet despite the success the sector has had boosting production, most companies aren’t seeing the profits they were hoping for.
Here’s a not-so-fun fact regarding the shale sector: Nearly everyone has been operating at a loss since crude tanked during the summer of 2014.
But this doesn’t necessarily mean it’s a bad place to be…
You and I both know we’re not going to see $100 oil again anytime soon.
Thing is, we don’t need $100/bbl oil anymore.
Getting Paid… Finally!
By now, I can tell you that we already know where the best reserves are held.
The first and most obvious choice is none other than the Permian Basin in West Texas. Not only is it a personal favorite, but drillers there are tapping into a world-class play, since it was the only shale play to continue building production when prices were at their lowest.
Even though production lagged virtually everywhere across the United States, West Texas has been pumping more and more oil out of the ground.
And now that we’re barreling toward a new peak in U.S. production, companies have a little more wiggle room.
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The Next Big Shift
There’s really only one simple mantra that investors like us have: buy low, sell high.
Trust me, you don’t want it to be the other way around, which is where too many poor, unfortunate souls find themselves. It’s not their fault, mind you. They just succumb to the herd mentality, which you and I both know involves pure emotional trading.
And I can tell you right away that THAT kind of thinking is not what you want your financial security to rely on.
Lately, I’ve seen predictions for oil to crash below $30 per barrel again.
It’s not going to happen.
There are simply too many catalysts in place.
Does anyone really want to test OPEC’s resolve?
The internal war raging among the oil cartel’s members is reaching a serious breaking point. And I’ve told my readers before that we will see the group as we know it now dissolve.
Venezuela is on the verge of collapse, and, quite frankly, I’m surprised that the inevitable military coup hasn’t happened yet.
And, well, I’m pretty sure you already know about Qatar’s issues.
In fact, the only thing keeping oil prices from soaring right now is the fact that U.S. drillers are increasing production more than 100,000 barrels per day every month. And now that those companies are gaining more and more access to global markets, it’s even more of a threat to OPEC’s market share.
U.S. crude oil exports have more than doubled over the last six years, according to the stats at the EIA.
And there’s only one winner at the end of this fairy tale oil boom.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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