OPEC and Russia’s decision in early December 2018 to cut production in 2019 by 1.2 MMbbl/d sent a wave a relief through an industry that had seen the price of oil fall 30% from its peak in October last year.

As a result of seasonal operational trends and low commodity prices in the fall, operational activity slowed significantly toward the end of the year, as Patrick Schorn, vice president of wells at Schlumberger, noted at the Cowen 8th Annual Energy & Natural Resources Conference in December.

“There was a surge in hydraulic fracturing activity in the second quarter, especially in the Permian,” Schorn said. “This activity surge leveled off in the third quarter and [dropped] in the fourth quarter, which will show up in the first half production numbers in 2019.”

Indeed, oil prices teetering in the $50/bbl range, as is the case in early 2019, did not seem to dampen the enthusiasm for continued record production by operators as they made their plans for this year. This is primarily a result of breakeven prices that remain attractive even as West Texas Intermediate staggers. According to Pioneer Natural Resources’ December 2018 investor presentation, none of North America’s major shale plays feature breakeven costs of even $40/bbl, and many are under $30/bbl. In the Permian Basin, for example, Pioneer’s breakeven costs are just over $20/bbl.

Even after the price of oil sunk to $42/bbl in early December, and before OPEC announced its cuts driving prices back up, operators revealed plans to power forward this year. At the Capital One Securities 13th Annual Energy Conference in December, WPX Energy CEO Clay Gaspar announced his company would increase 2019 capex by as much as 32% over 2018 while planning a 28% growth in oil and gas production to as much as 105,000 boe/d.

Meanwhile, Devon Energy reported in its December 2018 investor presentation that it was planning 15% to 19% growth in oil production this year, particularly in the Stack play. According to the report, Devon is planning between four and eight wells per unit at its Morning Thunder, Northwoods, ML Block, Scott and Brachiosaurus developments this year. Devon also plans to accelerate development in the Rockies where it will shift its Super Mario area into development by spudding 35 Turner wells, according to the report.

In its December 2018 investor presentation, Chesapeake Energy reported its plans to more than double its oil production in the Powder River Basin. Also, Chesapeake reported it is planning a 65-well IOR project for June in the Eagle Ford, which it hopes will achieve 1.3 to 1.7 times potential improvement in oil recovery.

Low prices bruised the industry to close out 2018, and early production numbers this year will likely refl ect that. However, as Schorn said, the new year will likely see a gradual recovery as the market, hopefully, stabilizes. Even if prices do continue to teeter, the market decline of 2014-2016 taught operators a discipline that has paid off in low breakevens, and subsequently, operational breathing room.