November 05, 2019

3Q:2019 United States Oil and Lower -48 Natural Gas Outlook

Stratas Advisors

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Shale and other tight resources will power U.S. oil and gas production growth for years, albeit at a slower pace. Growth will continue to be driven by the usual suspects, the Permian in liquids and the “Mighty Marcellus” in gas. Stratas estimates U.S. crude production will average about 12.3 million b/d in 2020, up from an estimated 11.9 million b/d in 2019. Lower-48 dry gas is estimated to average 90 Bcf/d, a slight increase over the 89 Bcf/d estimate for 2019. The rate of growth for both oil and gas is projected to slow in 2020 on reductions in drilling activity that began in 2019.

Unconventional oil production continues to support U.S. oil

Oil production in the U.S. continues rest on the foundation of unconventional bedrock of shale oil. This bedrock is comprised of familiar formations including the Wolfcamp and Bone Spring in the Permian Basin, the Eagle Ford and Austin Chalk in the Gulf Coast Basin, the SCOOP and STACK in the Anadarko Basin, and the Bakken and Three Forks in the Williston. The Permian reigns supreme in shale oil. A large inventory of attractive drilling locations coupled with disciplined operators will lead to steady growth through the mid-2020’s. Oil production in the Permian is estimated to produce less than 1 MMBbl/d of growth in 2020.

Unconventional oil production from shale is expected to average 7.6 MMBbl/d in 2020 (15% growth) with exit rates of 8.1 MMBbl/d (11% growth). Looking at shale production in the Permian, Stratas estimates average production of 4.2 MMBbl/d (27% growth) with exit rates of 4.5 MMBbl/d (18% growth) in 2020.

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