OPEC and Russia just gave their most implacable foe, U.S. shale, an early holiday gift.
As corporate boards for American oil explorers prepare to sketch out 2018 drilling budgets, Thursday’s historic agreement by Saudi Arabia, Russia and other major crude producers to extend supply caps for another year may prompt directors to spend more on drilling. That’s because the producer group’s restraint has meant higher prices for U.S. shale drillers, who haven’t been shy about hiring more rigs or flooding global markets with more cargoes.
After climbing out of a crater dug by the worst oil-market collapse in a generation, North American explorers probably will boost spending by 20 percent next year, according to an Evercore ISI survey of industry budget trends. That would follow an estimated 41 percent jump in 2017.
“The North American E&P industry is very itchy to spend more capital dollars,” said James West, an Evercore analyst who’s recognized as the keeper of the keys to North American spending data going back to the mid 1980s. “They’re in the board rooms right now talking about budgets and OPEC is saying what they’re going to do through 2018.”Click here to read the entire article.
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