In response to higher crude oil prices, financial results for 42 U.S. exploration and production (E&P) companies showed large increases in both cash from operations and capital expenditures in the fourth quarter of 2021 (4Q21). Cash from operations for the E&P companies reached $27.5 billion in 4Q21, the largest amount in any quarter since 3Q14. Compared with 3Q21, capital expenditures increased 60% to $15 billion. However, despite higher capital spending and increasing crude oil prices, crude oil production by the E&P companies was still 10% below pre-pandemic levels.

We base our analysis of the E&P sector on the published financial reports of 42 publicly traded U.S. oil companies. These companies do not necessarily represent the sector as a whole. In 4Q21, these 42 publicly traded companies collectively produced 3.8 million barrels per day of crude oil in the United States, or about 33% of total U.S. crude oil production.

The West Texas Intermediate crude oil price averaged $77 per barrel (b) in 4Q21, an increase of $35/b (82%) compared with 4Q20. An increase in crude oil prices generally results in higher production, but production has not grown in response to higher crude oil prices.

One constraint on well drilling and completions is the ability of oil field service companies to provide the needed rigs and crews to bring a well online. Published financial reports for 14 U.S. oil field service companies show that less cash from operations over the past two years has led to decreased capital expenditures compared with pre-pandemic levels, likely resulting in reduced operating capacity. From EIA Alex DeKeyserling

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