US shale production may prove more resilient in 2026 than many imagine

Every time oil prices see a period of extended volatility and Brent threatens to slide below $60 per barrel, an all-too-familiar debate ensues about the impact of such market conditions on US shale production.

However, this revolution that’s catapulted the US to the top of global producers’ leaderboard appears to be holding its own.

Much of this resilience is down to the US shale industry experiencing some not-so-subtle corporate, operational and structural changes. These appear to be causing seismic shifts across the main Texan plays of Permian, Eagle Ford and Barnett, and perhaps beyond.

The most obvious of these shifts happens to be the entry of the big beasts of the industry into the patch.

‘Mom and Pop’ independents make way for the big guns

When meaningful US shale oil volumes first started coming to the surface in the early 2000s, primarily from the Barnett shale patch in Texas, that charge had been led by independent mavericks for decades. 

The late George Mitchell, regarded as the father of the US shale revolution, was among them before eventually striking it big. These small-scale independents who bore the pain and reaped the gain, peppered with scepticism and optimism of the decade to 2010, were often dubbed as ‘Mom and Pop’ independents. 

Their tenacity and trials in the decade that followed generated umpteen column inches. However, the turn of the last decade and the post-Covid operating climate that followed, brought a pretty visible shift – a meaningful entry of the oil majors to a patch they’d left alone to the smaller players. 

By 2024, the largest shale producers were none other than supermajors ExxonMobil and Chevron, producing 1.5 million bpd and 1.3 million bpd respectively. 

Today, they rub shoulders with the likes of Occidental Petroleum and ConocoPhillips, as mergers and acquisitions, purchases of distressed assets and unexplored acreages become the order of the day for both midcap and major oil companies. This trend continues unabated, as shale midcaps merge with other midcaps to form newer large caps. 

Mergers and acquisitions galore

In February, Devon Energy and Coterra Energy announced a merger in an all-stock deal to become a large-cap producer with a top position in the Permian Basin. The headline valuation of the merged entity would be around $58 billion, a behemoth created by a merger of equals or a peer group combination.
 
The latest deal is just one among many. Data points to a wave of consolidation going back to 2023, indicative of a near-term shift. That year, the shale patch saw $192 billion worth of deals. In 2024, $105 billion worth of deals were done including Diamondback’s acquisition of Endeavor Energy Resources for $26 billion.

M&A volumes slowed markedly last year. But that’s partly because interested players shifted from ‘blockbuster’ to ‘smarter’ deals, described by some as strategic lower ticket transactions, often gas-weighted, stock-for-stock moves aimed at bolstering inventory. Additionally, most, if not all, had to an extent achieved their near-term objectives of consolidation and boosting scale.
 
Weathering lower for longer

While past decades were all about smaller shale players surviving when Brent fell below $80, the current scenario – of market stasis in the $60s – has seen participants assert resilience and a desire to keep going. 

In June, Darren Woods, CEO of ExxonMobil, said his shale assets would keep producing even if oil prices slumped to $50, as would many other patch operators. It’s a belief held by the US government, too.

Speaking at Gastech 2025 in Milan, Italy in September, US Energy Secretary Chris Wright, a founder of a fracking firm himself, said his country’s recent production uptick - driven by shale - was no fluke and would weather $50 prices. “This is down to efficiency gains as our companies continue to innovate. The Trump Administration backs this natural progression of the industry wholeheartedly.”

There is mounting evidence of this. Masking price vulnerability, US supply has remained resilient, partly down to hedging strategies but the rest due to efficiency gains successfully offsetting a decline in the US active rig count and headcounts. 

ExxonMobil’s operations in the Permian basin lead this charge, with CEO Woods crediting his robust outlook on shale production to new fracking methods such as using lightweight proppant to improve recovery rates.

He’s one among many bringing technology and ingenuity into play alongside his peers who also continue to find new ways to pump more shale oil. Many operators now put their breakeven price between $30 and $40 per barrel, a near halving of pre-Covid breakeven levels for some.

The shale patch ensured US oil production averaged 13.6 million bpd last year by accounting for nearly half of it. That production level is expected to be maintained this year, before declining marginally to 13.3 million bpd in 2027, according to the country’s Energy Information Administration, as Brent potentially slides to around $50. 

If realised, the figure would represent the country’s and the shale patch’s first output decline since 2021, but one that will not be anywhere near enough to question its resilience or drop US production volumes lower down the global leaderboard. This story has a considerable way to go yet.