In the wake oil price recovery, some US shale oil producers restarted rigs they had been forced to shut down earlier. But now they are facing the times when they have to mothball wells again. Shale oil companies seized the opportunity to resume extraction in the most productive areas amid the oil rally. It was not for long, though. Shale oil and gas production in the United States did not have a chance to pick up, falling by 25-30% again, as reported by IHS Global.
Producing shale oil is more expensive than extracting crude oil and in the context of plunging oil prices many companies operate at a loss. The recent trends in the global oil market encouraged shale oil producers to resume operations. Meanwhile, the oil rally did not last long and prices slipped to their prior lows, preventing shale oil companies from restarting their mothballed rigs. There is no economic sense to continue exploration of these fields. Besides, the companies fall behind in extraction technologies which would substantially increase rig productivity.
According to some experts, oil prices will extend fall and shale oil producers will be operating below the break-even point. Cheap oil prices do not even allow companies to secure their loans received for the exploration of the fields.
