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From: Les
US shale oil's crash diet likely to bring forward output dip
By Anna Driver and Terry Wade

HOUSTON Mon Feb 23, 2015

uk.reuters.com

In the old days, producers felt compelled to pump in a downturn, fearing competitors with wells in the same reservoir would take the oil. That is no longer a risk as shale is locked in rock.

"(Now) you can leave it in the ground. In the old days you had to produce because everybody was sucking on the same straw," Harold Hamm, CEO of Continental Resources, said at a conference in January.

Already, many companies have announced 25-70 percent reductions in drilling and a total of at least $25 billion in spending cuts.

Some went even further. Magnum Hunter Resources Corp has halted all drilling and told services firms it will not resume work unless its costs fall 40 percent, the company's Chief Executive Gary Evans told a conference in Houston.

Such pullback, combined with shale well decline rates of some 60 percent or more a year, has Evans predicting U.S. production will begin falling "in the next two months."

His view is largely echoed by several other executives, though they say their own output will hold up or rise and expect much of the decline come from the shuttering of older, low-yielding wells known as strippers.

Assuming that many drilling contracts will be carried out, the U.S. Energy Information Administration (EIA) still sees output climbing early this year to peak at 9.42 million barrels per day in May, with a decline starting in June.