Onshore crude oil production in the United States has peaked, Diamondback Energy has said, expecting output to start declining later this year unless prices reverse course.
At the release of its first-quarter results, the company said fracking crews in the shale patch had declined by 15% since the start of the year and are set for further declines amid the international oil price rout.
Diamondback is one of the largest Permian operators and plans to curb its spending this year in response to the price developments that most analysts argue were the direct result of President Trump’s trade policies and particularly his fondness for tariffs.
“As crude pricing moves lower for a period of time, as it has over the last month, we expect activity to slow and oil production to decline,” Diamondback said in a letter to investors. “We currently estimate that the U.S. frac crew count is already down ~15% this year, with the Permian Basin crew count down ~20% from its January peak, and both are expected to decline further. We also expect the U.S. oil directed rig count to be down almost 10% by the end of the second quarter and decline further in the third quarter. As a result of these activity cuts, it is likely that U.S. onshore oil production has peaked and will begin to decline this quarter.”
The sentiment expressed by the shale company is popular in the industry. Coterra Energy, another big shale operator, is also cutting its spending and planned production growth activities for the year as a result of the latest in oil price developments. Chances are that the rest of the independents reporting this week will also be effecting some form of protective measures to weather the crisis.
“As our industry faces macroeconomic uncertainty and oil price headwinds, we believe it is prudent to reduce oil-directed activity at this time. As such, we are lowering Permian investment in 2025 and now expect to average seven Permian rigs during the second half of the year, down 30% from our original guidance of ten,” Coterra’s CEO, Tom Jordan, said.
By Irina Slav for Oilprice.com
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