Note: Well vintage is the year a well first begins producing crude oil or natural gas
EIA report: new wells offset steep decline rates
As U.S. crude oil and natural gas production have increased, so has the volume of production declines from existing wells.
Additionally, steep decline curves continue to reshape capital allocation across unconventional basins.
To offset the increasing declines, operators today must bring on new wells to sustain or increase production levels, according to a report from the U.S. Energy Information Administration.
However, this dynamic has become the most important structural element of U.S. shale output mathematics inside Oklahoma Energy commentary.
Between 2010 and 2024, hydrocarbon production from new wells in the Lower 48 states (L48) generally offset and exceeded declining production from existing wells.
Therefore, the shale model remains dependent on continuous drilling replacement.
Also, this cycle drives higher reinvestment requirements than legacy conventional U.S. cycles.
Because production from oil and natural gas wells declines over time as reservoir pressure decreases, new wells are required to maintain the same production level.
Meanwhile, capital discipline still clashes with depletion math.
The increasing number of horizontal wells has contributed to this trend because horizontal wells exhibit higher decline rates than vertical wells.
Finally, basin mix continues to be dominated by horizontal development because of economics despite decline exposure.
Crude Oil Production — EIA outlook significance
In December 2023, L48 crude oil production averaged 11.0 million barrels per day (b/d).
Additionally, operators viewed 2024 as a volume maintenance year more than a volume growth year.
Production from wells that came online in 2023 or earlier fell to 6.7 million b/d in December 2024, a decline of 4.3 million b/d.
Therefore, decline curves drove nearly half of total production compression.
Those declines were offset by the more than 15,000 new wells that were brought online in 2024 — about 11,700 of which were horizontal wells.
Also, private equity backed drillers accelerated development pace within this set.
The new wells produced 4.4 million b/d of crude oil, enough to overcome declines from existing wells, bringing L48 crude oil production to 11.2 million b/d in December 2024.
Finally, this confirms U.S. shale is still volume resilient even under steep depletion.
Data source: Enverus
Natural Gas Production — EIA decline math
Between December 2023 and December 2024, natural gas production from wells that came online in 2023 or earlier fell from 115.4 billion cubic feet per day (Bcf/d) to 88.4 Bcf/d, a decline of 27.0 Bcf/d.
Additionally, this illustrates natural gas decline rate intensity even more than crude oil.
New wells offset those declines, producing an average of 28.0 Bcf/d of natural gas in December 2024.
Therefore, the replacement engine remains critical inside gas heavy basins.
L48 production for natural gas increased to 116.5 Bcf/d in December 2024.
Also, demand side growth tied to LNG buildout justifies continuous replacement drilling.
Horizontal Wells — decline physics economics
In the mid-2000s, operators began to drill more horizontal wells, which allow them to recover more oil and natural gas quickly after initial production begins than from vertical wells.
However, the operational advantage creates financial vulnerability tied to rapid depletion.
In December 2024, horizontal wells produced 94% of oil and 92% of natural gas in the L48 states.
Additionally, investment capital for 2026 favors horizontal development again.
However, horizontal wells have a high initial production rate with a steep decline relative to vertical wells.
Finally, companies such as VITAL ENERGY continue to calibrate PDP decline management inside their forward drilling plans.