Shale Oil 2.0

The recently observed uptick in oil prices has given many US shale oil producers the opportunity to expand production. Latest forecasts from the Energy Information Administration (EIA) see US oil production rising by 10 percent year-on-year in 2017, and 3.3 percent in 2018. Nevertheless, shale oil exploration and production (E&P) companies face a number of potential ‘bumps in road that could hinder their progress and recovery in the near-to-medium term. Besides higher borrowing costs, shale oil producers also face the possibility of constrained capacity leading to inflated operating costs. One area where costs are likely to rise is related to oilfield services, which includes the cost of rigs, equipment and personnel.