From late 2011, my presentations posed this question, as supply-constrained analysis (the methodology we use) suggested this was the most likely outcome.
Major Oil Companies’ Free Cash Flow
Source: Astenbeck Capital Management
Three years later, we know the answer: The oil majors’ free cash flow plummets. And this applies not only the likes of Statoil and Shell, but also to the wider set of non-OPEC conventional producers, for example, Sinopec and PetroChina. The operators are taking steps to correct the situation, involving both a reduction in capex and a brisk pace of divestments. Their efforts will eventually turn the situation around.
On the other hand, unless capital efficiency improves dramatically, conventional non-OPEC oil production is likely to take a substantial hit, considerably more than most observers expect.