A pump socket operates near a gas turbine power station in the Permian basin oil field outside Odessa, Texas, American on February 18, 2025.
Eli Hartman | Reuters
The production of American Oshore oil has probably reached a summit and will begin to decrease due to the recent crude price plunge, endangering the position of the country as the largest producer of fossil fuels in the world and its energy safety, the CEO of Diamond energy told shareholders in a letter this week
US crude crude oil prices fell by around 17% this year, as the recession fears due to President Donald Trump's tariffs weighs on demand for demand. At the same time, OPEC + producers led by Saudi Arabia quickly increased market offer.
Adjusted for inflation, there have been only two quarters since 2004, when the oil prices of the first month were as cheap as today, excluding 2020 when the Pandemic of Cavid-19 swept the world, wrote the CEO of Diamondback, Travis STICE. Diamondback is an independent producer of oil and gas focused on the Permian basin, the most prolific oil patch in the United States
“Consequently, we believe that we are at a tilting point for the production of American oil at the current prices of raw materials,” warned Sice shareholders in a letter Posted on Monday. “It is likely that the production of oil oneshore has culminated us and will begin to refuse this quarter,” STICE told investors in his letter, indicating cuts in activity levels.
US crude crude oil prices increased by more than 4% to $ 59.56 a barrel on Tuesday, domestic production, production should decrease.
Risk energy security
The shale revolution over the past 15 years has transformed the United States into the largest producer of fossil fuels in the world, the country producing more oil and gas than combined Saudi and Russia, the CEO said.
“This has transformed our economy and taking into account the United States an energy security level which is not possible at the beginning of this century,” STice told investors. “Today's prices, volatility and macroeconomic uncertainty have endangered this progress,” warned the CEO.
West Texas Intermediate Prize
Depending on the amount of oil prices, the quantity of capital required for the United States to produce 13 million barrels per day and so that the permien produces 6 million BPD “could be an untenable elevator for the business model that we are setting up, where we return so much to our investors who have the company,” analysts on DiamondBack results, DiamondBack Diamondback benefits.
“We do not have a crystal ball in the rest of the world, but we have a very good vision of what the United States looks like, and at the moment, it is a company that slows down considerably and probably in terms of production,” said STICE.
Earth production to decrease
The number of shale and gas shale and gas fracturing crews has already dropped by 15% this year with crews in the Permian basin decreased by 20% compared to a peak in January, said STICS, warning that the number of crews will probably decrease more.
Platforms focused on oil production should decrease by almost 10% at the end of the second quarter and drop more in the third, the CEO said.
Diamondback reduced its investment budget to around 400 million to $ 3.4 billion to $ 3.8 billion this year. Trump's steel prices are the highest opposite wind that the oil producer is currently fighting, said STICE. These prices have increased well costs by around 1% or 40 million dollars per year, the CEO said. Efficiency gains should compensate for the increase in costs as the activity slows down in the coming quarters, he said.
Diamondback abandoned three platforms and a completion team, and the company plans to stay at these levels through the majority of the third quarter, the CEO said in his letter. He now plans to drill between 385 and 435 wells this year and complement 475 to 550 wells.
“To use a driving analogy, we remove our accelerator foot as a red light approaches,” said STICE. “If the light becomes green before arriving in the light, we will hit the gas, but we are also ready to brake if necessary.”
