Recharged Shale Boom in 2018 Still Faces Shortage of Frackers

  • Undersupply gives diversified companies edge, JP Morgan says
  • Post-Harvey refinery boost to slow as fuel stockpiles rise

The Big Risk for U.S. Shale Production

A recharged U.S. shale boom will grow in 2018, with diversified companies such as Concho Resources Inc. and Devon Energy Corp. gaining an edge in overcoming a lack of completion crews for drillers.

In its outlook for the coming year, JP Morgan Chase & Co. says it expects U.S. shale production to continue rising if West Texas Intermediate crude prices hold steady above $60 a barrel. But even as companies keep drilling, they’ll be hard-pressed to secure enough frack crews, adding "another wrinkle to the already tight labor and supply chain equations," the report said.

A tight services market suggests having more scale will be increasingly important for independent explorers, JP Morgan said. The analysts identified Concho Resources and Devon among their top picks.

Meanwhile, refiners may have a hard time sustaining the gains they saw in 2017 after Hurricane Harvey shuttered some capacity and the spread between Brent and WTI prices widened, the report said. That’s due in part to rising fuel stockpiles. The report identified diversified companies, such as Andeavor and Marathon Petroleum Corp., as preferred picks.

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