Monday, February 29, 2016

Oil: Two U.S. Shale Producers Say The Industry Can Live With $40 Oil

From City A.M.:

US shale gas industry sets sights on oil prices recovering to $40
Two of the largest US shale gas producers have said oil recovering to $40 per barrel will reverse the ailing industry’s fortunes.

Continental Resources could increase capital spending if US crude reaches low-to mid-$40s, allowing it to boost production by 10 per cent next year, chief financial officer John Hart said last week.

Whiting Petroleum also said oil at $40 to $45 would allow it to re-start activity on some of the wells its due to abandon next month, Reuters reported.

While the US shale gas industry has remained surprisingly resilient to low oil prices, the cracks are beginning to show. Last week, the two companies announced plans to halt fracking operations in Bakken, an area which has been one of the biggest drivers of the US shale gas boom.

Nevertheless, the comments by Continental Resources and Whiting suggest that the industry could bounce back more quickly than current expectations. Less than a year ago, major shale firms were saying they needed oil above $60 a barrel to produce more....MORE