After a devastating 2020 for U.S. oil, the mood in the shale sector has been historically reserved, with drillers focused on balancing their books and getting into the black before overextending with new exploration.
"The oil industry is predictably cyclical: When oil prices climb, producers race to drill - until the world is swimming in petroleum and prices fall. Then, energy companies that overextended themselves tumble into bankruptcy," The New York Times sets the scene.
After the West Texas Intermediate crude benchmark crashed to nearly $40 below zero on April 20th last year, stoked by pandemic fears, a drop in oil demand, and an ensuing oil price war between Saudi Arabia and Russia, many Permian Basin shale companies found themselves bankrupted overnight.
Oil prices have rebounded impressively, in no small part thanks to drillers in the U.S. and abroad staying strong on their output curbing commitments.
Despite the fact that shale drillers' self-control has proven to be a winning tactic, many shale companies may find such a golden borrowing opportunity impossible to resist.
Oil drilling activity has already been on the rebound in the United States, albeit at a lower rate than before the pandemic.
There are presently a total of 318 active oil rigs, less than half of the 683 that were drilling late in March of last year, before the pandemic hit global markets in earnest.
https://oilprice.com/Energy/Energy-General/Is-Shale-Exploration-About-To-Surge.html
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