Learn more about Hart Energy Conferences
Get our latest conference schedules, updates and insights straight to your inbox.
OPEC will likely take steps to boost oil prices, which started the year in free-fall, the chief executive of top shale producer Pioneer Natural Resources Scott Sheffield said on Jan. 5.
"Saudi is not going to let Brent stay around $75 a barrel," he told investors at a Goldman Sachs conference in Miami, Florida. "It wouldn't surprise me if they had another cut."
His comments came as oil posted its biggest two-day loss in three decades to start the year this week. Brent futures were trading around $78 a barrel on the morning of Jan. 5.
Sheffield said future oil prices, often referred to as "the strip," will likely stay in backwardation going forward, with current prices higher than future contracts.
"There is no liquidity in the market," he said referring to later-dated oil contracts. "Banks aren't hedging, there's nobody using that product and hedging anymore. No airlines are hedging, so there is nothing to bring up the strip."
He anticipated oil prices to find a base of around $90 a barrel, with an upside of around $150 a barrel.
Going forward, Sheffield predicted that oil output in the largest U.S. shale basin will eventually hit 7 MMbbl and plateau. He warned that the gas-to-oil ratio there will likely shift to under 50% oil over the next ten years, prompting the need for a new gas pipeline roughly every 18 months.
Only Chevron, Pioneer Natural Resources and ConocoPhillips have capacity to produce more than 1 MMboe/d in the Permian by 2030, Sheffield predicted.
At the same time, he said the rig count will likely stay relatively flat and potentially decrease amid surging prices for services and takeaway constraints. He pointed to day rates of roughly $38,000 for rigs operated by drilling contractor Patterson-UTI.
"Something has got to break," he said.
Recommended Reading
Some Payne, But Mostly Gain for H&P in Q4 2023
2024-01-31 - Helmerich & Payne’s revenue grew internationally and in North America but declined in the Gulf of Mexico compared to the previous quarter.
Green Swan Seeks US Financing for Global Decarbonization Projects
2024-02-21 - Green Swan, an investment platform seeking to provide capital to countries signed on to the Paris Agreement, is courting U.S. investors to fund decarbonization projects in countries including Iran and Venezuela, its executives told Hart Energy.
Shell’s CEO Sawan Says Confidence in US LNG is Slipping
2024-02-05 - Issues related to Venture Global LNG’s contract commitments and U.S. President Joe Biden’s recent decision to pause approvals of new U.S. liquefaction plants have raised questions about the reliability of the American LNG sector, according to Shell CEO Wael Sawan.
BP Pursues ‘25-by-‘25’ Target to Amp Up LNG Production
2024-02-15 - BP wants to boost its LNG portfolio to 25 mtpa by 2025 under a plan dubbed “25-by-25,” upping its portfolio by 9% compared to 2023, CEO Murray Auchincloss said during the company’s webcast with analysts.
Private Equity: Seeking ‘Scottie Pippen’ Plays, If Not Another Michael Jordan
2024-01-25 - The Permian’s Tier 1 acreage opportunities for startup E&Ps are dwindling. Investors are beginning to look elsewhere.