H1 2020 Lower 48 supply - rising prices, stunted growth

This downturn has shown us that Lower 48 producers are quick to respond to negative market conditions, taking around 2 million b/d of oil out of the market this year so far and 6 bcfd of gas. When does growth come back? The response to positive market conditions will be much more muted. Oil growth in 2021 is unlikely given how low activity levels have gone, but we do think it can reach early 2020 levels of 10.3 million b/d in ~4 years and continue to grow another 2 million b/d in a stable, high-price environment. It will take over two years for gas production to come back as there is a stronger pull from North America gas demand. Some headwinds operators will face coming out of the downturn which put downward pressure on growth are: -lower service sector capacity increasing prices -worsening financial health together with investor demands for increased returns -less low cost resource from upspacing trends