The U.S. shale industry is now entering the Shale 4.0 era, which will be more focused on a scaling up E&P operations, Rystad Energy Senior Shale Analyst Matthew Bernstein said at Hart Energy’s SUPER DUG Conference & Expo in Fort Worth.

The shift comes as the number of operators has shrunk due to consolidation across the Lower 48.

After the Shale 3.0 era – marked strict adherence to capital discipline –  the focus has changed, as highlighted by megadeals announced in late 2023 and early 2024. In the first quarter alone, U.S. upstream dealmaking reached a record $51 billion.

Companies are now in a new phase in which E&Ps are building for the long term, Bernstein said on May 16.

“What we really expect to see in the Shale 4.0 era … is a focus now on building business for scale in the most commercial locations for the long term,” Bernstein said.

The move comes as super majors and public independents continue to consolidate control over oil and gas inventory and production through billions of dollars in M&A.

Bernstein said Rystad expects E&P growth rates will start to “moderate as the top tier inventory dries up and the biggest names are taken off the board.”

Bernstein said the number of active individual U.S. E&P companies has already dropped by about 16% since 2021, according to Rystad's analysis.

“The public E&Ps have really proven over the past five years that they are able to spend within their means, that they're able to invest within their operating cash flow and that they are consistently able to deliver cash to shareholders on a quarterly basis,” Bernstein said.

“And we really see a bit of investor sentiment changing where companies are now being allowed to go out and raise new debt to put their cash to work in other ways,” Bernstein said.

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