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Investing.com-- U.S. shale production has peaked and is likely to begin declining from the current quarter, Texas-based producer Diamondback (NASDAQ:FANG) Energy said in a letter to shareholders on Monday.
The company flagged challenging times for the U.S. oil industry in recent months, as oil prices plummeted on concerns over demand disruptions and higher production from the OPEC+.
Lower prices are expected to slow U.S. oil and gas production in the coming months, especially if they remain at current levels or fall even further. Oil prices slumped to a more than four-year low this week.
Diamondback said current oil prices were a tipping point for U.S. oil production, and that it was likely that “U.S. onshore oil production has peaked and will begin to decline this quarter.”
“This will have a meaningful impact on our industry and our country,” Diamondback said, noting that the shale boom of the past two decades had spurred American employment, growth, and had also lessened the country’s dependence on foreign oil.
The company slashed its 2025 capital budget by $400 million to $3.4 to $3.8 billion, stating that it was scaling back extraction activity as lower oil prices battered its margins.
U.S. oil production soared to record highs of over 13 million barrels per day in 2024, capping off a sharp increase in output over the past two decades.
Diamondback was able to capitalize on the shale boom by quickly bringing new wells online through fracking- a much cheaper and quicker means of oil extraction. Comments from the company– on a slowdown in shale– threaten U.S. President Donald Trump’s plans to ramp up U.S. energy production.
Trump has repeatedly called for higher production and lower energy prices. But lower prices weigh on the operating margins of oil and gas companies, giving them less incentive to produce more.