HOUSTON, Feb. 5 (UPI) -- Despite the dramatic decline in crude oil prices since mid-2014, consultant group Wood Mackenzie finds production has yet to see significant curtailments.
"Since the drop in oil prices from late 2014, there have been relatively few production shut-ins with less than 0.1 percent of global production halted so far -- around 100,000 barrels per day globally," Stewart Williams, a vice president of exploration and production research, said in an emailed statement.
Brent crude oil is trading at about $34 per barrel, down about 5 percent for the year and 25 percent lower than at the start of the fourth quarter. Wood Mackenzie finds about 3.4 million bpd, about 3.5 percent of the total global oil supply, is cash-negative with Brent at $35 per barrel.
Wood Mackenzie's analysis cash-negative doesn't "necessarily" mean production will be shut down because the cost of restarting production may higher than the short-term loss.
"Given the cost of restarting production, many producers will continue to take the loss in the hope of a rebound in prices," investment researcher Robert Plummer said.
Exxon Mobil, one of the first of the so-called supermajors to report earnings this year, said spending of $31.1 billion last year marked a 19 percent decline from 2014. The company said it plans to spend about $23 billion this year, a decrease of 25 percent from 2015.
Wood Mackenzie finds U.S. onshore production to be among the hardest areas hit by lower crude oil prices. Canadian oil sands operations are also suffering in North America, prompting the provincial government in Alberta to take steps to reconfigure its oil-dependent economy.
Overseas, Wood Mackenzie said some projects in the North Sea may also experience negative pressure even as the British government moves to incentivize the region.
Most companies have said they're configured to rebound once crude oil prices recover. Wood Mackenzie said it estimates the price for Brent crude oil will average $41 per barrel for 2016.