EIA's monthly 914 Report

dan_s · Post by **dan_s** » Mon Sep 02, 2024 9:33 am

U.S. oil production peaked in December, 2023 and has yet to return to that level in 2024

U.S. Crude Oil Production barrels per day. There is a lag in actual production data because it comes from state reports.

DEC 2023: 13,308,000
JAN 2024: 12,554,000 < Winter weather related well shut-ins
FEB 2024: 13,102,000
MAR 2024: 13,171,000
APR 2024: 13,249,000
MAY 2024: 13,189,000
JUN 2024: 13,214,000

Prior to the Covid Pandemic, U.S. crude oil production peaked at 12,980,000 bpd in NOV 2019. Upstream companies slammed on the brakes and U.S. oil production declined to 9,714,000 bpd in MAY 2020. U.S. oil production did not return to Pre-Pandemic level until August 2023.

Natural Gas production is also down from 128,833 million cubic feet per day (Mmcfpd) in DEC 2023 to 124,561 Mmcfpd in JUN 2024

See 914 report at this link: https://www.eia.gov/petroleum/production/#oil-tab

U.S. oil and gas production are unlikely to increase much beyond these levels since upstream companies are not completing enough new wells to offset natural depletion rates in existing wells. Most new wells are horizontal wells in tight formations that require fracking. Upon completion they come on at high rates, payout quickly and then decline rapidly.

It is my opinion that Trump's return to the White House will not bring back "Drill, Baby, Drill" unless oil & gas prices are much higher. During Trump's first term the Shale Boom was in the early stages of rapid growth. Today the Permian Basin is the only U.S. oil basin with production upside potential, and it is expected to peak by 2030. The Age of Cheap Oil ended decades ago. The oil price decline in early 2020 due to the historic drop in oil demand caused by the FEAR of Covid-19 won't happen again. Oil price moves caused by FEAR (up or down) don't last.

Completed well costs have come down, so well level economic are very good for most upstream companies if WTI averages $75/bbl. BUT this world will soon run out of $75/bbl oil. We are running out of Tier One drilling locations. Even the Permian Basin will need higher oil prices.

Over the weekend I updated all of the Sweet 16 forecast models. You can download the Sweet Summary Spreadsheet from the EPG home page. Click on "Sweet 16 - 2024 Forecasts and Portfolio" and click on Tab 2 to see the updated forecasts for Q3 and Q4 for each company. In column L you can see that all 16 companies should report positive Adjusted Net Income for Q3 and all 16 companies should be free cash flow positive in Q3.

This week I will update the profiles for all of the companies in our Small-Cap Growth Portfolio first. The profiles for REPX and SOI have already been updated. They can be found under the Small-Caps tab on the EPG website.