HOUSTON – Oil production in the United States slipped by 56,000 barrels a day in January, the U.S. Energy Information Administration said Thursday, showing the nation’s crude output didn’t drop as steeply as in December.
January’s 0.6 percent slide extended the U.S. oil production drop since April to 515,000 barrels a day, bringing the overall harvest to 9.18 million barrels a day. But Texas, which supplies more than a third of domestic oil, increased its yield by 25,000 barrels a day in the first month of the year, still kicking out more oil nearly two years after the downturn began. It was the state’s third monthly increase since March.
“It’s almost something of a phenomenon that the rig count has dropped so dramatically and production has flat lined,” said John Kilduff, an oil-market analyst at Again Capital. “As we’re all learning, it has much to do with increased efficiencies and with U.S. producers doing more with less. Shale drilling has a $35 breakeven in some spots.”
Besides Texas, a handful of other states including Oklahoma and West Virginia also increased production in January, while the Gulf of Mexico and Alaska together dropped by 21,000 barrels a day.
The nation’s crude production had dropped by 93,000 barrels in December, the third-sharpest monthly decline in 2015 after May and June, around the time when oil prices rose to around $60 a barrel. January’s decline was more in line with recent months.
Kilduff said one of the reasons oil production didn’t fall as much in January as the previous month is that drillers are using every tool available – including resilient oil production – to help pay off high levels of debt.
“These companies are stretched and living hand to mouth,” Kilduff said. “Even if they’re making barely nothing, if it gets them cash flow, they’ll keep doing it.
For 61 independent U.S. oil companies, net debt rose to $199 billion in 2015, nearly double what it was in 2010 and three times more than a decade ago. Their cash levels dropped from $39 billion in 2014 to $23.7 billion last year, according to data compiled by Bloomberg.