More than two dozen employees of Denver-based shale producer Ovintiv Inc. sent form letters this week to Texas energy regulators opposing any state-mandated oil production cuts in the face of plunging energy prices.
The state's Railroad Commission (RRC), which has the authority to mandate production curbs in the state, will consider next week a proposal to require larger oil producers to cut output by 20% beginning May 1.
The proposal was submitted by shale producers Parsley Energy Inc. and Pioneer Natural Resources Co., and backed by RRC Commissioner Ryan Sitton, as a way to curb a free fall in crude oil prices.
The state's two other commissioners took to Twitter last week to distance themselves from Sitton's advocacy, saying they had not yet made up their minds. Passage requires two of three to agree on curbs, which would be the first by the state in nearly 50 years.
Ovintiv, formerly known as Encana, has core operations in Canada, Oklahoma and Texas. Some 30 employees, ranging from a legal analyst and lease operators to the head of investor relations, sent emails as of April 7 objecting to the plan.
Michael Schmidt, Ovintiv's Texas-based investor relations chief, submitted one of the letters arguing "Texas should remain a free market state." He did not immediately return a call and email requesting comment.
Oil prices collapsed last month to around $20 a barrel after Saudi Arabia and Russia agreed to pump full bore while the spread of the coronavirus zapped demand for fuel. Ovintiv employees argued that coordinated cuts would "give Saudi Arabia, Russia and other OPEC nations leverage over Texas in perpetuity."
Other submissions were mixed, with Occidental Petroleum Corp. opposed to cuts and Unitex Oil & Gas LLC and Hibernia Resources III LLC in support of the cuts.
The investment bank said key oil products markets are showing "steep backwardation and inventories that have fallen to low levels."
Arkansas, Louisiana, Mississippi and Texas RRC Dist. 1, 2, 3, 4., 5, 6, inland, offshore
June 2021: Brinninstool West Field-Wolfcamp Well: 5,453 bbl of Oil, 9.779 MMcf of Gas per Day