The so-called shale revolution continues to drive a reordering of the U.S. energy industry, with companies increasingly prioritizing deployment of oil production equipment in shale plays and moving away from other investments.
Ratings agency underscores industry's increasingly domestic focus
In a recent note to investors, Fitch Ratings highlighted the fact that companies have been divesting international assets as they focus on opportunities in domestic shale formations. The firm specifically cited Marathon Oil's recent announcement that it would sell assets in Norway and the U.K., and dedicate at least 60 percent of its 2014 capital expenditures budget to domestic operations.
Fitch pointed out that although Marathon is following in the footsteps of Apache and numerous other industry stakeholders, the shale boom's impact on larger, integrated oil and gas companies has been more muted, due to the broad diversification of their investments. The impact on independent producers has reportedly been much greater, as they are able to shift a larger portion of their resources toward lucrative shale development opportunities.
Technological advances making shale plays even more attractive
The development of advanced hydraulic lift solutions is one of the factors that has enabled well operators to generate such positive results from these formations. Fitch explained that "shale play economics continue to benefit from ongoing efficiency gains from better well designs, lower completion costs, and higher hydrocarbon recoveries."
Companies in other parts of the world are also looking at shale opportunities, although development abroad is moving forward at a "much slower pace," according to Fitch.
The ratings agency holds that "companies remain focused on expansion in North America [because] the depth of shale resources available in North America is considerable and exploitation opportunities are significantly more advanced," compared to plays located in other countries.