The U.S. oil and gas industry is on unsure footing, but a large number of unconventional wells remain profitable at an oil price of $40 per barrel, BTU Analytics LLC President Kathryn Miller said at the Colorado Oil and Gas Association's Energy Summit.

In the firm's analysis of existing shale oil wells, BTU Analytics found that approximately half of U.S. production came from wells that had half-cycle break-even costs of $40/bbl or less. "Half would be feasible [at a $40/bbl wellhead breakeven]," Miller said. "It means you would decide to drill that well again at $40."

This means producers can increase production at relatively cheap prices quickly if they needed to, as there is a massive number of drilled but uncompleted wells across the nation which would break even at $40/bbl. While the percentage of drilled-but-uncompleted wells that would be profitable at or below $40/bbl is higher in regions like the DJ Basin and the Eagle Ford Shale, the sheer size of the Permian Basin gives it an uncompleted well count well above all other U.S. plays.

"There are 3,000 wells [in the Permian] … that are below this capital hurdle," Miller said. "And another 1,800 elsewhere."

The massive number of profitable-but-uncompleted wells in the Permian, along with the large amounts of equipment in the region, make it likely that it will see a sustained production rebound before other unconventional plays.

"There's a benefit to being in a basin with equipment in place," Miller explained. "It's really hard to get a drilling rig to a play that is not as popular or has less activity in it overall."

The reality of the U.S. industry's situation is that a rebound is not likely in the near future, and most independent producers are not in a situation to expand production without a sizable jump in prices. Miller pointed to the difficult environment that many independents are now navigating, where they have to live within their own cash flow and clean up their balance sheets before focusing on expanded growth.

"There's too much debt for this industry," Miller said. "Having this cash flow affected by a huge drop in natural gas and crude oil prices couldn't have come at a worse time. We've seen the door shut from capital markets, and now we're seeing the doors shut from banks as well. Funding has to come from the companies themselves."

The combination of low prices, sluggish demand and heavy debt has left many producers just looking to maintain their current production levels and hoping for better days to come.

"The last time horizontal rig counts were this low, the Barnett Shale was the major play in the United States," Miller said.