A senior CEO stated that the U.S. oil industry has “reached”

A record record, but that the American oil industry has “reached” and has already begun its fall, as it is fighting under the weight of the lower oil rates and prices, said the CEO of the Pure Game Producer of the Permian basin.

Cruge prices have fallen this week to the new four -year lows since the pandemic in the midst of the fears of the recession and the unexpected production hikes of the Nations of the OPEC and its allies. As the global slowdown spreads throughout the industries, the North -American Oil Producers is quickly pivoted to Download drilling platforms and reduce prices with prices now below profitability levels, including Texas Permian Texas producers Diamond energy and Coterra energyBoth who celebrated their earnings calls on May 6.

“We believe that we are at an investment point for the U.S. oil production at current prices of goods,” said President and CEO of Diamondback, Travis Stice, in a letter of needle -moving shareholders before the call. “As a result of these activity cuts, it is likely that oil production on the United States has achieved and will begin to decrease this quarter.

“This will have a significant impact on our industry and our country,” added Stice. As the global economy goes, so does oil.

Diamondback, the largest oil producer focused only on Permian, has become a key point of view for the industry. Stice’s notice was, in effect, a call of awakening anyone in the industry yet to take into account what was already underway.

The company said it will reduce its counting of the drilling platforms by three and will cut one of its wells or crew. Diamondback reduced its 2025 capital cost expenses by $ 400 million to $ 3.6 billion, although oil volumes are only expected to fall by 1% due to efficiency gains.

Steel rates have increased the costs of the Baix well by more than 10% and contribute to decline activity levels, said Stice.

“We are a little more than 100 days in this new administration and,” Good Lord. “

Tom Jorden, President and CEO of Coterra Energy, Tom Jorden

Coterra’s president and CEO, Tom Jorden, said that it is likely to be “tied” as certain nations of the OPEC led by Saudi Arabia, and that its allies announced a second direct walk in its production fees on May 3, at a time when President Trump wants oil prices to reduce the cost of gas.

“We are a little more than 100 days in this new administration and,” Good Lord, “Jorden said in the earnings call on May 6.” There has been a large amount of volatility introduced, whether we talk about oil markets or the rates and our relationships worldwide. All of these converge in the forecasts of the oil price. The President tries to do many difficult things ahead and the White House is a little fast. We have some sympathy for this sense of urgency. “

The bottom line is that Coterra is ready for this fall to last a while, Jorden said.

“We were built for this. Coterra is an ark, not a party boat,” he said.

“We hope that these rates will be resolved and this threat of recession is high, but our experience tells us that we cannot execute our program with hope, and better to be cautious and to make adjustments accordingly,” added Jorden. “We are beating the hatches and we hope this will last for a while.”

As Coterra focuses on both the oily Permian and the gaseous Shale Shale in Pennsylvania, the company is cutting three of its 10 Permian teams, but adds two platforms to the Marcellus amid the healthiest prices of natural gas. This means reducing the CAPEX Permian by $ 150 million and giving $ 50 million to Marcellus.

“It’s not a situation that closes our capital program,” Jorden said. “It only redirects it and we have some really attractive gas opportunities we can do.”

A maturation industry

The Federal Government estimates that the production of North -American Oil is located close to the highest record of almost 13.5 million barrels daily, and almost half of this total comes from the Permian in West Texas and to the south -East Mexico.

No other country, including Saudi Arabia and Russia, produces much more than 10 million daily barrels.

But the North -American industry is quickly consolidating after a record wave in the last two years, and a relatively recent emphasis on capital discipline has assured that schist oil producers can turn faster to reduce activity levels, as they do now.

Kimmeridge, an energy -private capital company with an activist angle, launched a white book this week arguing that the mature permian is approaching the beginning of its decline and that the producers will try to grow in less active areas, including rockies and Canada.

“Although continuous hostilities have several larger countries, it seems that the world is properly supplied with both oil and gas,” says the role of Kimmeridge. “However, all the recent activity of M&A Energy throughout North America would suggest that producers have a problem with the organic of future inventories on the coast, with the cost of unprocessed locations that continue to increase in all the main bases. This is how the paradox for medium -term perspectives for energy supply is shown here: North America should not be able to maintain its increasing supply to its supply. Historical.

In fact, Diamondback Stice said on May 6, efficiency gains resulted in “collecting cents” instead of dims or barracks.

“As capital continues to come out of the investment equation, this decline we are really can increase,” said Stice. “This is where we are in the maturation cycle to run out of these resources.”

And both Diamondback and Coterra come out of large permian acquisitions when oil prices were higher. Diamondback of April 1 closed its acquisition of $ 4.1 billion of double eagle, and this follows its massive purchase of energy resources of $ 26 billion last year. Also, Coterra closed in January at his $ 4 billion in combined acquisitions of Franklin Mountain Energy and Avant Natural Resources.

Diamondback President Kaes Van’t Hof, who is assuming the CEO Mantle this year as a Stice, is a step as executive chairman, said that more decisions are being made now to “preserve a beautiful inventory”, fixation opportunities, and not only to save money.

And the price of current oil simply “does not work”, he said.

“The marginal barrel in the United States is not taking place today,” said Van’t Hof. “We already see it in terms of FRAC activity (fracking).

“We do not have a crystal ball in the rest of the world, but we have a very good view of what the United States looks like. Right now, it is a business that slows down dramatically and is likely to decrease in terms of production.”

This story originally presented to Fortune.com

Source link