Don't expect US oil production to increase in Q1

[dan_s]

Most upstream companies cut back on drilling and completing new wells in Q1 because it is more expensive to do field work during winter weather. I doubt that we seen any increase in US oil production until mid-Q2.

Notes below from EIA on December 15, 2021

Capital expenditure by U.S. oil companies remains low despite higher crude oil prices
Financial results for 47 U.S. exploration and production (E&P) companies show limited growth in capital expenditure during the third quarter of 2021 (3Q21), despite more cash from operations. Oil prices have been generally increasing since 3Q20, reaching seven-year highs in November 2021. Although cash from operations has more than doubled over the past four quarters for these companies, capital expenditure increased by comparatively less (54%) and remained significantly lower than the 2015–19 average. With higher cash flow, publicly traded E&P companies were repurchasing more of their shares of stock, increasing dividends, paying down debt, and increasing their cash balances. Our analysis of public statements from these companies suggests capital expenditure this year will be effectively the same as in 2020.

We base this analysis on the published financial reports of 47 publicly traded U.S. oil companies. As a result, the observations do not necessarily represent the sector as a whole because the analysis does not include private companies that do not publish financial reports. In 3Q21, these 47 publicly traded companies collectively produced 5.3 million barrels per day (b/d) of crude oil and natural gas liquids (NGL) in the United States, or about 32% of all U.S. crude oil and NGL production for the quarter.

The West Texas Intermediate (WTI) crude oil price averaged $70.61 per barrel (b) in 3Q21, an increase of $29.72/b (73%) compared with 3Q20. Higher prices contributed to a year-over-year gain of 130%, or $12.8 billion, in cash from operations. Cash from operations reached $22.7 billion in 3Q21, the most generated by these companies in any quarter since 3Q18. Their liquids production was flat year-over-year at 6.0 million b/d in 3Q21 and declined by 4% from the previous quarter. Compared with pre-pandemic levels, production in 3Q21 was 1.2 million b/d (16%) less than in 1Q20. Over the last four quarters, their capital expenditure increased by 54% to reach $9.3 billion in 3Q21.

WTI should average about $75/bbl in Q4