The U.S. shale patch is unlikely to follow President-elect Donald Trump's campaign highlight 'drill, baby, drill' as the industry is far more consolidated and disciplined than when Trump was first president at the end of the 2010s. While welcoming a second Trump term, American oil and gas producers are expected to stick to their disciplined approach to capital expenditure and drilling operations.
Consolidation Keeps Drilling in Check After the Permian saw several large mergers and acquisitions M&A waves during President Biden's term in office, the start of the second Trump presidency comes at a time when many of the private producers have already sold their operations to the large publicly traded companies. These public firms have realigned their priorities after the 2020 crash in demand and prices, and now prefer higher earnings and shareholder returns to high growth rates in production. As more drilling locations in the Permian are now in the hands of large listed firms, investor demands for high returns trump the high growth rates of oil production. The U.S. shale patch is drilling, but it is drilling because it wants to distribute more of the profits to shareholders. It has made huge progress in capital discipline and efficiency gains and is getting more bang for its buck. Priorities are now returns to investors and financial frames capable of withstanding oil price volatility. Related Critical Minerals Race Heats Up as Battery Demand Wanes As producers become bigger, they focus on shareholder returns and wouldn't be inclined to respond to every price spike with a major boost in drilling that ultimately floods the market with oil and depresses prices. This relentless drilling for higher production has been the shale industry's modus operandi for a decade before Covid and the demand and market crash. Until 2020, many smaller producers sought to maximize output and price realizations whenever oil was heading highe
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