About two years ago, OPEC+ made a high-stakes wager that it could curb oil production and drive crude prices higher without unleashing an onslaught of supply from U.S. shale producers. Indeed, Saudi Arabia was adamant that the golden age of U.S. shale was over as plunging oil prices put hundreds of companies out of business. Well, the alliance’s gambit has definitely paid off, with oil prices staging a strong rebound and WTI crossing the $80/barrel mark for the first time in seven years.
Meanwhile, whereas gloomy predictions about the death of U.S. shale appear to have been overdone, shale drillers have dramatically cut production and mostly stuck to their pledge to cut costs, return money to shareholders in dividends and share buybacks, and pay down debt.
And their neighbors to the north have similarly stuck to the same playbook despite being awash with cash.
After years in the doghouse, Canada’s struggling oil patch is enjoying a rare oil boom, with oil and gas revenues expected to reach record levels in the current year if prices remain elevated.
Typically, during past oil booms after a downturn, Canada’s OilPatch went through a predictable pattern of new startups setting up shop—soaring land prices and companies cranking up production. But things are playing out differently during the current boom cycle despite resurgent oil demand and oil prices at multi-year highs.
“I’ve never seen this kind of response to demand increases before–ever,” Tamarack Valley Energy (OTCPK: TNEYF) CEO Brian Schmidt has told the Canadian Broadcasting Corporation (CBC).