News Release

The Path to Recovery Will Follow the Fundamentals

byEnverus

Austin, TX (May 6, 2020) – Enverus, the leading oil & gas SaaS and data analytics company, has released its latest FundamentalEdge report that presents the company’s updated view of the oil and natural gas markets, with a special focus on the remainder of 2020 and forecasts for the next five years.

“There have been numerous ideas proposed to try and correct the unprecedented drop in oil and gas prices created by a global supply imbalance, Saudi-Russian price spat, coronavirus pandemic, and resulting demand destruction,” said Bernadette Johnson, vice president of Strategic Analytics at Enverus. “The recent OPEC+ agreement to cut 9.7 MMBbl/d in May and June for the near term is too little, too late, however. The answer to understanding the path to recovery has been there all along—fundamental economics and supply/demand,” said Johnson.

“It’s also important to note that any oversight-led cuts may cause a broad range of unintended consequences because the oil market is very complex. Different basins and fields produce very different qualities of crude. The previously used yard sticks do not account for the growth of unconventional supply and each refined product has its own market that is impacted differently right now,” added Johnson.

“In this environment, it is hard for shale producers to get any more efficient than they already are, and so the market and common responses to a price crisis are all well underway. Shale producers are nimble—they can add rigs quickly and bring a well online in three months or less when the time is right. Yes, there will still be more painful announcements, but we are seeing the bottom. The world is still highly reliant on hydrocarbons and that isn’t about to change in a six-week period,” said Johnson.

Key Takeaways from the report:

  • Despite unprecedented OPEC+ production cuts and anticipated production declines elsewhere, the supply/demand imbalance in Q2 2020 is still woefully close to 15 MMBbl/d. Inventories of crude oil and refined products are rising worldwide. There is no way to avoid a severe drop in US crude and condensate production in 2020, not with today’s price environment and certainly not with the outlook for global supply/demand balances. Apart from weak demand and low prices, a significant portion of US crude production in April-May 2020 is at risk of being shut in due to the lack of suitable market disposition.
  • The weak crude oil price environment has pushed the rig count to levels not seen since 2016. In April alone, the rig count is down 37%, or 258 rigs (April 1-26). Based on pipeline data, oil-directed basins—including the Permian, Eagle Ford, Anadarko, and Bakken—have started to show signs of gas production losses. Enverus continues to expect a significant decline in gas production in 2020. However, the current forward-curve prices are not enough to support the upcoming peak winter demand. Therefore, Enverus forecasts prices will exceed $4/MMBtu and could reach $4.50/MMBtu as early as the coming winter. Longer term, natural gas prices are expected to average $2.80/MMBtu; this level allows gas production growth to meet expected demand gains.
  • Capex cuts since the end of Q1 earnings season have amounted to $21B for US public independents, a 32% average reduction from previously disclosed guidance. The same operators will expect to spend $50B less in capital dollars in 2020 than 2018. Lower capex and remaining hedges are some of the few levers that help mitigate the accelerated deterioration of liquidity.

 

Members of the media can download a preview of the full report, COVID-19: Oil and Gas Fundamentals, or contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

Visit enverus.com/managing-the-energy-market to stay informed of the latest market conditions.

About Enverus
Enverus is the leading data, software, and insights company focused on the energy industry. Through its SaaS platform, Enverus provides innovative technologies and predictive/prescriptive analytics, empowering customers to navigate the future. Enverus’ solutions deliver value across upstream, midstream and downstream sectors, enabling the industry to be more collaborative, efficient and competitive. With more than 1,300 employees across the globe, the Company’s solutions are sold to more than 6,000 customers across 50 countries. Enverus is a portfolio company of Genstar Capital and brings together the technology of Drillinginfo, RS Energy Group, PLS, 1Derrick, MineralSoft, Midland Map Co., MarketView, DataGenic Group, PRT, Oildex, Cortex, Red Dog Systems, and RigData as one company. Creating the future of energy together. Learn more at www.enverus.com.

Picture of Enverus

Enverus

Energy’s most trusted SaaS platform — creating intelligent connections that uncover insights and opportunities to deliver extraordinary outcomes.

Related News

Enverus Intelligence Research is releasing its summary of 2Q2025 upstream M&A activity and outlook for the rest of the year.
News Release
ByEnverus

Calgary, Alberta (July 23, 2025) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS company that leverages generative AI across its solutions, is releasing its summary of 2Q2025 upstream M&A activity and outlook for the...

How the One Big Beautiful Bill Act could change clean energy tax credit economics
News Release
ByEnverus

Enverus Intelligence® Research (EIR) has released a new report on how changes to clean energy tax credits under the One Big Beautiful Bill Act could reshape project economics and create new opportunities for revenue optimization.

Sunburned & winded: Only 30% of U.S. solar and 57% wind projects expected to survive under one, Big, Beautiful Bill Act
News Release
ByEnverus

CALGARY, Alberta (July 15, 2025) — Enverus Intelligence® Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS company that leverages Generative AI across its solutions, has released a new report accessing the impact of the One Big Beautiful...

2025 Mid-Year Minerals Market Outlook What’s moving the market next?
News Release
ByEnverus

Enverus invites journalists and industry professionals to attend its “2025 Mid-Year Minerals Market Outlook” webinar at 1:00 p.m. CT on July 15, 2025.

Bearish oil thesis yet to play out
News Release
ByEnverus

Enverus Intelligence® Research has released its latest Fundamental Edge report.

persona-Operators-with-non-operating-assets-.jpg
News Release
ByEnverus

Enverus is releasing its annual list of the most prolific 100 private oil and gas producers in the U.S. based on gross operated production, well count and rig movements across last year.

GettyImages-1148355005
Analyst Takes Blog Topics
ByAl Salazar, Enverus Intelligence® Research (EIR) Contributor

In reaction to news of U.S. airstrikes on Iran’s nuclear facilities, Al Salazar, director at Enverus Intelligence® Research (EIR), released this statement explaining the significance on oil prices:

Stranded sparks: Rising costs threaten viability of Texas Energy Fund projects
News Release
ByEnverus

Enverus Intelligence® Research (EIR) has released a report that analyzes how rising capital costs and supply chain delays have affected natural gas-fired power projects under the Texas Energy Fund (TEF).

GettyImages-1178545406-oil&Gas
Analyst Takes Blog Topics
ByAl Salazar, Enverus Intelligence® Research (EIR) Contributor

In response to news that Israel has launched an attack on Iran, Al Salazar, director at Enverus Intelligence® Research (EIR), released this reaction explaining the significance on oil prices.

Find Out How Enverus Can Help Your Business

Subscribe to the Energy Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Get Started

Sign up for our Blog

Register Today

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert