Oil & Gas

08 May 2020

Top US Shale Producer Sees Oil Price Recovery Continuing

08 May 2020  by Reuters   
US shale producer Pioneer Natural Resources expects oil prices to recover to at least $45 per barrel this year, its chief executive said on Thursday.

Producers slashed output and energy companies cut tens of thousands of jobs as plummeting demand for fuels and a global supply glut sent prices below $20 a barrel last month. At that level, few US shale producers would be able to cover their production costs.

Even when US and global benchmark prices return to $45 a barrel, "very few" US producers would be able to afford to expand production because of high debt levels, Scott Sheffield, Pioneer's chief executive, said in a call with investors.

US and international oil futures were trading about $25.75 and $31 per barrel, respectively, on Thursday.

"There will probably only be a handful of companies that can grow, maybe five in my opinion, in the $45 to $50 WTI and Brent world," Sheffield said of his shale oil counterparts.

Sheffield recently called for Texas energy regulators to mandate 20 per cent production cuts to reduce the supply glut. Pioneer plans to take about 3 per cent, or 7,000 barrels per day, of existing oil production off the market.

Its total output of oil and gas will be about 11 per cent below a target set earlier this year.

"We had the benefit to be able to move all of our crude oil on the Gulf Coast and export a lot of it," he said. Other shale producers have cut a larger portion of their production because of a lack of pipeline transport to export hubs, he said.

Pioneer earned $289 million, or $1.74 per share, in the first quarter ended March 31, down from $350 million, or $2.06 per share, in the same period a year ago. Adjusted per share earnings of $1.15 topped Wall Street's $1.11 estimate.

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