Lower 48 upstream: 2021 in review Report

Insight 20 January 2022

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Report summary

2021 was a year of recovery for the Lower 48 sector and showed that consistently practicing a conservative spending strategy, despite improved conditions, pays off. Reinvestment rates were at an all-time low throughout the region, averaging 42% or about half the expected rate. Tight oil producers paid down debt, and the result was consistent quarterly gearing reductions for the independents. Lower 48 deal activity rebounded and ultimately accounted for 40% of 2021 global M&A activity. Despite this improvement, total spending did not reach pre-pandemic levels. The year was marked by ConocoPhillips’ acquisition of Shell Permian assets; the $9.5 billion deal is the largest Wolfcamp deal to date and changed the Permian playing field.