U.S. shale – 10 winners in a downturn

Drilling rig
Source: DollarPhotoClub

The dramatic downturn in the price of oil, natural gas and other commodities over the past year or so has taken its toll on a whole host of companies in the natural resources sector. Shale gas and oil drillers have not been spared hardship as the plummeting price of their products has led to drastic cutbacks and even bankruptcy for some firms in the sector. However, even in the midst of the turmoil engendered by the difficult operating conditions the industry faces, some firms have managed to prosper.

This is not to say that the 10 firms identified below are making money hand over fist. In a downturn like this winning can consist of simply managing to remain profitable or cutting costs to stay afloat while improving future prospects. The companies selected for this list have used a variety of tactics to improve their strategic position during the crisis, including:

Cost cutting: Almost without exception, the companies on the list below have found ways to dramatically reduce their cost structures. The main methods for doing so have been to use innovative drilling techniques, elicit cost reductions from suppliers and cut overhead costs as much as possible.

Production cuts: Shutting in non-profitable production is a step a number of shale producers have taken to conserve capital and preserve their assets until a more favorable pricing environment presents itself.

Hedging: Companies that have hedged production through the downturn have been able to insulate themselves, at least to some degree, from the worst effects of the crisis.

Magazine Issue 1 Cover
The full article, along with all maps and graphs, is available in Issue 1 of Shale Gas International Magazine and can be found on page 39.
Continue Reading