The death of US shale has been greatly exaggerated

Indeed, the worst might be over for the U.S. shale patch thanks to a deluge of Covid-19 vaccines arriving just when the second, third, and even fourth waves of infections have been ravaging the world and causing widespread despair.

The UK has become the first country in the world to approve the Pfizer-BioNTech BNT162b2 vaccine, which has been shown to offer up to 95% protection against Covid-19. The first 800,000 doses will be available in the country starting next week, with another 40M doses on order.

Even better news: The U.S. could soon follow suit with an FDA approval and distribute enough of the Pfizer/BionTech vaccine to immunize 100M people--or a third of its population--by the end of February...

There are at least five other promising vaccine candidates from Moderna, Johnson & Johnson, AstraZeneca, CureVac, and Sanofi-GlaxoSmithKline already in the pipeline.

Further, a recent Bloomberg New Energy Finance (BNEF) report says that shale production costs have been falling, with E&P companies operating in the lowest-cost U.S. basin, Permian and Delaware, posting breakeven levels of ~$33 a barrel, down from a $40 per barrel just a year ago.

In an earlier report, Citigroup and Goldman Sachs projected that oil prices might hit $60 a barrel by the end of 2021. Given the high efficacy that the Covid-19 vaccines have so far demonstrated, do not be surprised if Bank of America's prediction that oil prices will hit $60 during the first half of 2021 proves to be accurate. In other words, the majority of U.S. shale companies could turn cash flow positive in a matter of months.

The U.S. shale sector might be down but is by no means about to go out. Shale companies know it, and have been busy consolidating their operations so as to be better primed for the oil price recovery.

It's not time for shale to surprise us--yet. An oil price rally on vaccines doesn't exactly connect with the massive impact on demand the coronavirus has had. There's an important time lapse here.

But if American shale has finally learned its lesson on resilience, we can expect some real value-focused growth once the dust settles on multiple crises.