Shale executives see M&A activity squeezing U.S. oil production, Dallas Fed reports
(Bloomberg) 鈥 U.S. oil production will decline if the corporate-acquisition spree sweeping the shale sector is prolonged, according to a Federal Reserve Bank of Dallas survey.
More than 50% of oil executives told the Dallas Fed they foresee lower domestic crude production if the consolidation trend continues for five years, according to second-quarter survey results released Wednesday.聽
鈥淐onsolidation by E&P firms has curtailed investment in exploration,鈥 an unidentified executive was quoted as telling the bank. 鈥淭he last few years of mergers and acquisitions have decreased activity in the oil patch,鈥 another said. About 48% expects 鈥渟lightly lower鈥 production and another 6% foresee 鈥渟ignificantly lower鈥 production.
Shale operators are being closely watched by the OPEC+ alliance for any supply impacts from the recent wave of acquisitions. The sector鈥檚 $250 billion in announced takeovers in recent months make it less likely the U.S. will surprise the oil market like it did with last year鈥檚 unexpected million-barrel increase in daily production.
Full-year 2024 production is forecast to rise by about 310,000 bpd, according to the U.S. Energy Information Administration. The number of rigs drilling for oil is at the lowest since early 2022 while the number of deployed frack crews is about half what it was six years ago.
The Dallas Fed鈥檚 quarterly surveys are widely read for the anonymous comments that offer an unfiltered view on a range of topics impacting the oil industry. The bank鈥檚 region encompasses Texas, northern Louisiana and southern New Mexico.