U.S. oil drillers from Texas to North Dakota are scaling back plans to drill new wells next year as crude prices tumble, The Wall Street Journal reports. The benchmark U.S. oil price has plunged more than 25% since late June to trade below $80 a barrel this week, in part because Saudi Arabia has cut its prices to wrest back market share. Oil fell another 77 cents to $77.91 a barrel at the close of business on Thursday.
Continental Resources Inc., a major oil producer in North Dakota’s Bakken Shale, announced Wednesday that the company wouldn’t add drilling rigs next year. ConocoPhillips Co. says that next year’s budget would fall below the $16 billion spent this year, dropping plans for some new wells in places such as Colorado’s Niobrara Shale. And Pioneer Natural Resources Co. has signaled that it might delay adding rigs in Texas unless oil prices rebound.
“We’re in a battle with Saudi Arabia in regard to market share,” Pioneer Chief Executive Scott Sheffield told investors Wednesday. The Irving, Texas, company hasn’t announced its drilling plans for next year, but Sheffield says they would hinge on where oil prices stand in the next few months.
Several industry analysts have said that U.S. drilling would remain economically feasible at current oil prices and that some operations would be profitable even if oil slumped to $60 a barrel.
To some degree, U.S. energy companies are victims of their own success. They are pumping more oil and gas with fewer rigs and drilling and finishing wells faster than just a few years ago. Not all drillers have it easy, however. Many companies have taken on substantial amounts of debt and some are trying to tap expensive, fringe regions in places such as the Tuscaloosa Marine Shale in Louisiana and Mississippi. Read the full story (subscription may be required).
