In 2021, U.S. oil exploration & production companies are only spending $40 billion on CAPEX, which represents a decline of 20% from 2020 and a decline of 50% from 2019 and 2018. Despite a 20% decline in CAPEX spending this year, U.S. crude oil production has remained steady at 11 million barrels per day for the last twelve months. From February 2020 peak U.S. crude oil production of 13.1 million barrels per day, U.S. crude oil production has declined by 16%.
What nobody in the U.S. mainstream media realizes is... U.S. crude oil production has been kept steady in 2021 due to a preexisting backlog of drilled uncompleted wells (DUCs). In January 2020, U.S. DUCs hit a record high of 8,500 wells. Today, the backlog of DUCs is down to 6,500 wells and projected to fall below 5,000 wells by year-end 2021. Historically, the backlog of DUCs has never declined below 5,000 wells. It is believed that approximately 5,000 DUCs are poor quality wells that will never be brought into production. Therefore, there are only 1,500 good quality DUCs left to be brought into production.
If U.S. oil companies don't greatly increase CAPEX spending in 2022, U.S. crude oil production will plunge causing crude oil prices to explode well above $100 per barrel.
A large increase in CAPEX spending will be required just to maintain U.S. crude oil production at current levels of 11 million barrels per day.