Among a group of 16 independent oil and gas exploration and production (E&P) companies, crude oil production in the second quarter of 2015 rose an estimated 21% sequentially. At the same time, estimates for full-year capital spending (capex) rose by 10%. And all this at a time when oil prices dropped by about $15 a barrel.

Analysts at RBN Energy reported Thursday that small and mid-sized E&P companies have indicated that they increased capital investment plans for the full year by $730 million sequentially in the second quarter to a total of $13.9 billion from a first-quarter estimate of $13.17 billion. In 2014, the 11 companies included in the survey spent $23.32 billion. These firms also produce natural gas, but they are more directly focused on oil production.

Among the five large independents, however, the total capital spending estimate has dropped from $28.3 billion to $27.64 billion for 2015, compared with a 2014 total of $41.88 billion.

Small and mid-sized companies now estimate full-year production will rise 16%, compared with an estimate for a 13% rise at the end of the first quarter. Large companies have lifted their production-increase estimate from 3% at the end of the first quarter to 4%.

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Based on second-quarter announcements, here are current spending and production estimates for 2015 for five E&P companies as reported by RBN Energy.

Continental Resources Inc. (NYSE: CLR) has maintained its original estimate of $2.7 billion in capex, down 40% from 2014 actual spending, and raised its production estimate to 76.9 million barrels, a 21% increase over 2014 production of 63.6 million barrels.

Pioneer Natural Resources Co. (NYSE: PXD) raised its estimate on capex for 2015 by $350 million to $1.95 billion, still 44% lower than actual 2014 spending. Pioneer maintained its production forecast of 81.6 million barrels for the year, up 10% over 2014 production of 74.2 million barrels.
Sanchez Energy Corp. (NYSE: SN) reduced its full-year capex estimate by $50 million to $575 million, down 34% compared with spending of $871 million in 2014. The company now estimates full-year production of 17.5 million barrels, a jump of 57% over 2014 production of 11.1 million barrels.

These three firms are among the small and mid-sized firms included in RBN Energy’s survey and what they have in common is trying to bring their costs into line with their cash flows. That is tricky with prices continuing to fall, especially because the goal of their cost controls is to reach a point where their cash flow can fund their capital investments.

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Among the large companies, the focus is on maintaining returns while also maintaining their access to borrowing. That translates to cutting service costs, which allows the firms to maintain a level of drilling that keeps cash flow positive.

ConocoPhillips (NYSE: COP) has lowered its estimate of capital spending in 2015 by $500 million to $11 billion, down 32% compared with spending of $16.2 billion in 2014. Production is now forecast to rise 2% to 527.9 million barrels, up from 515 million barrels a year ago.

EOG Resources Inc. (NYSE: EOG) has now cut its expected 2015 capex budget to $4.44 billion, down 40% year over year. Of the five large companies included in RBN Energy’s survey, EOG is the only one that is also forecasting a production decline. The company’s current estimate for 2015 production calls for 208.4 million barrels, down 5% from the 219.1 million barrels produced in 2014.

What is most amazing about all this is that E&P companies of all sizes are able to maintain production levels at a time when the price of crude oil is less than half what it was just a year ago. Operations have become much more efficient, drilling and completion costs have been driven down, and the producers have concentrated on those drilling sites where payoffs are expected to be the best.

The big question, of course, is how long the producers can keep this up. Will rising OPEC production eventually cause U.S. production to fall because costs simply cannot drop further and all the hot spots have been drilled?

By any conventional rationale, U.S. production has got to fall if prices go much lower. But we’re talking about unconventional oil and unconventional thinking, so all bets are off.

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