Your take on this?
Posted: Wed Feb 18, 2015 2:57 pm
The reason most E&P companies will have higher production in 2015 even though they are slashing capital expenditure is because their production ramped up so fast in 2014. It is just simple math.
For example;
Production in 2014 by quarter:
1000
1100
1200
1300
4600 = total
Production in 2015
1250
1200
1150
1100
4,700 = total
A couple things to keep in mind:
Production starts when wells are completed and tied into a gathering system. That is months after they are drilled. There is a 3-6 month lag in the reduction in capital spending and a drop in production.
Most of the Sweet 16 will see slightly higher production in 2015, but their production will peak in Q1 or Q2 then go on decline.
EIA is now forecasting that U.S. onshore production will peak within six month. When it rolls over, it will be VERY HARD to reverse the decline.