During the Covid-19 pandemic, U.S. shale production was pushed over the precipice. It fell from well above 9 mbpd in December 2019 to 6.8 by May 2020. The recovery was onerous. Debt-ridden operators who had prioritized growth during the pre-pandemic period found themselves without cash as investors started to demand return on their investment. Looming inflation, rising prices and scarce labour also contributed to the slow revival of shale oil production. Growth was expected to be sluggish.

Despite this gloomy prognosis output has been climbing relentlessly. Apart from a weather-related dip early 2021, the ascent has almost been uninterrupted. In fact, the EIA, in its latest Drilling Productivity Report, estimates that combined output from the seven shale regions will rise to 9.3 mbpd, the highest on record.

Has drilling activity been re-invigorated? Far from it. The seemingly impressive increase in output level is mainly the function of the so-called DUCs, drilled but uncompleted wells. These, as the name implies, are wells that are successfully drilled but because hydrofracking has not occurred yet, no oil or gas is extracted. They are valuable resources for producers because they can be turned into productive wells for less effort and money than drilling new ones.

It is the number of these wells that have been on the decline. The conspicuous fall in DUCs is the prime reason behind the recent rise in shale output. Lack of available funding forced shale companies to utilize DUCs. Production from new wells is set to decline whilst rig counts, a widely followed indicator of exploration activity, have not reached the pre-pandemic level and has been stagnating for a year. Consequently, the lower the number of DUCs, the slower the expected growth in shale output. The current rise in shale output should, therefore, come to a halt soon.