Shale CEO on US Oil Output, ”The economics wouldn’t support adding rigs [in 2021]”

One of the top producers in America’s shale patch doesn’t see drilling picking up significantly even after this week’s surprise Saudi pledge to curb production sent prices surging.

“I really don’t see much increase in the Permian Basin or the U.S. shale over the next several years,” said Scott Sheffield, chief executive officer of Pioneer Natural Resources Co.

U.S. oil output is expected to remain roughly flat at about 11 million barrels a day for the next several years, Sheffield said Wednesday in an investor webcast hosted by Goldman Sachs Group Inc. Meanwhile, two of the nation’s biggest shale regions — North Dakota’s Bakken and the Eagle Ford in Texas — may never see growth again, the CEO said.

Although the U.S. crude benchmark jumped above $50 a barrel this week for the first time since February after Saudi Arabia said it will cut output in the next two months, Sheffield said that Pioneer’s current production plans are unchanged.

Saudis Take Charge of Oil Market With Surprise Output Cut

“I never anticipate growing above 5% under any conditions,” Sheffield said. “Even if oil went to $100 a barrel and the world was short of supply,”the economics wouldn’t support adding rigs because service costs would cut into margins, he said.

The CEO predicted more industry consolidation could occur this year if oil stays above $50 a barrel, allowing companies to improve balance sheets.

While Pioneer is focused on completing its recent acquisition of Parsley Energy Inc., the door isn’t closed to other acquisition opportunities in the Permian Basin, he said. The company had considered buying closely-held Endeavor Energy Resources LP but decided a deal couldn’t be done.

“Anything else we would look at after bringing in Parsley has got to be double-digit accretion that’s got to be in the Permian Basin,” he said. “The chances of doing deals like that are slim.”

© 2021 Bloomberg L.P.

Follow us on social media for the latest updates in B2B!

Image

Latest

Listen Carefully, Respond Creatively
April 12, 2024

In this captivating episode of the Fans First series, Jesse Cole, the mastermind behind the Savannah Bananas, delves into the transformative business philosophy of “listen carefully, respond creatively.” This approach has not only skyrocketed the Savannah Bananas to fame but also serves as a universal blueprint for revolutionizing customer service and engagement across all sectors. […]

Read More
Stacey Childress, Senior Advisor at McKinsey and Company, discusses higher ed
Bold Measures are Needed to Improve Investment in Higher Education
April 12, 2024

The stakes for higher education have never been higher as the educational landscape sees rapid evolution. As universities and colleges grapple with the dual challenges of technological disruption and increasing demands for accessible, quality education, the question of how best to implement investment in higher education becomes a priority. This debate has been ignited […]

Read More
wake up healthy
Hey, it’s 9 am… Wake up Healthy with 9amHealth!
April 12, 2024

Healthcare Rethink host Brian Urban explores ways to wake up healthy and stay healthy with his guest, Dr. Avantika Waring, MD, the Chief Medical Officer, at 9amHealth. This episode delves into the transformative approach to healthcare delivery championed by 9amHealth. Dr. Waring’s journey from a humanities student with a love for French to a […]

Read More
public safety and security
Strengthen Public Safety and Security: Modernize Radio Communication for Better Field Response
April 11, 2024

The importance of radio communication within public safety and security operations remains unbeaten in an era dominated by digital transformation. This medium, essential for over a century, continues to be the lifeline for responders on the front lines. From ensuring the safety of field agents to facilitating real-time critical information flow and enhancing situational […]

Read More