The U.S. oil and gas industry has witnessed significant transformations over the last year, and 2020 should see even more transformative changes. At 2020 NAPE Summit in Houston, Texas on February 6-7, 2020, E&Ps, financiers and service companies will crowd exhibition halls to pick up the latest “swag”, network with familiar and new faces, strike up business deals and lean forward in panel discussions to learn how to get that extra “edge” to maximize profits and extend operations and profitability in an ever-volatile commodity price environment.

Below are five key oil and gas industry themes that are sure to be centerpieces of discussions among attendees and exhibitors alike at the event, now in its 27th year:

1. U.S. Shale Production Will Continue To Grow, But At A Slower Pace: U.S. crude production is estimated to average 13.3 million barrels per day (MMbbl/d) this year, according to the U.S. Energy Information Administration’s (EIA) latest Short-Term Energy Outlook (STEO), a 9% increase from 2019 production levels, and 13.7 MMbbl/d in 2021, a 3% increase from 2020. Predictably, much of the production growth is forecast to come from the prolific Permian Basin with an average output of 5.2 MMbbl/d in 2020 and 5.6 MMbbl/d in 2021. The EIA forecasts the Bakken region will be the second-largest growth area in 2020 and 2021, growing by about 100,000 bbl/d in each year.
2. U.S. Oil Exports Continue To Rise: For the first time ever in June 2019, U.S. exports of crude oil topped 3 MMbbl/d. Exports out of Corpus Christi, Texas have surged to record levels recently, often surpassing hubs such as Houston and Beaumont. As of January 24, the four-week average of overall U.S. crude exports hit a record of 3.37 MMbbl/d. If exports keep this pace up, export levels may reach 4 MMbbl/d if pipeline and docking infrastructure continues to accommodate further outflows.
3. Bankruptcies Continue To Pile Up: There were a total of 42 U.S. and Canadian oil and gas company bankruptcies in 2019, up from 28 in 2018, according to a recent Reuters report, citing data tracked by law firm Haynes & Boone. Poor geology, unfavorable pricing and limited capital will make it impossible for some companies to grow their business and meet their debt obligations. With an anemic M&A market, there will be limited opportunities for companies to sell their assets, so debt restructurings are expected to rise.
4. Consolidation Is Necessary, Needed In 2020: A growing number of distressed U.S. oil and gas firms and few funding options could mean that smaller independent producers could be acquired by bigger, more leveraged integrated shale players. Or, smaller independent E&Ps could consolidate to ramp up operations and cut costs. Either way, signs of consolidation have already started to emerge and this trend is likely to continue in 2020.
5. ESG Is Here, And Here To Stay: Environmental, Social and Governance (ESG)-themed investing is one of the most visible and durable megatrends in the investment landscape. Interestingly, the ESG movement totaled at least $30.7 trillion of funds held in sustainable or green investments in 2018, up 34% from 2016, according to Bloomberg, citing a report by the Global Sustainable Investment Alliance. While standardized reporting and disclosure metrics remain murky at best, several oil and gas companies and financial institutions have already publicly announced ESG-driven decarbonization targets and/or sustainability investments, including Repsol, Eni, Chevron, Shell and BlackRock, to name a few. More and more investors are demanding increased accountability regarding ESG issues as many companies are responding accordingly in their business models, operational practices and disclosures. Expect to hear lots of chatter around ESG-themed investments and sustainability practices in 2020.