A gradual recovery in crude prices helped US shale companies return to the market. Shale production is notable for high profitability and many companies would have been operating at a loss amid a price drop. However, the recent trends in the global oil market have provided a strong supporting point for resuming shale production. Halted wells are being brought online.
According to official statistics, the sector’s giants such as Oasis Petroleum and Pioneer Natural Resources are activating the wells that were drilled but uncompleted (DUCs) in 2014-2015 due to low crude prices. Back then, further exploration of these oil fields was considered pointless. Currently, as crude prices have consolidated near $40 dollars a barrel, companies resumed their performance. Independent observers are sure that such activity in DUCs will greatly increase supply in the global market, disturbing a fragile balance created by the efforts of OPEC and other leading exporters, including Russia.
Current prices are not high enough to ensure full profitability. Oasis Petroleum management hedged 70% of its production for 2016 above $50 a barrel and about 20% for 2017 at around $47 a barrel. Pioneer Natural Resources locked in a minimum price for 85% of this year's production, Reuters reports. Anyway, the US showed that it could decrease crude prices again if needed.
