• 3 minutes The World Economic Forum (WEF) - Davos 2022 Conference held this last week of May
  • 8 minutes How Far Have We Really Gotten With Alternative Energy
  • 12 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 44 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 9 hours Natural Gas is the Cleanest and most Likely Source of Energy to Fuel the World.
  • 3 days "Russia will stop 'in a moment' if Ukraine meets terms - Kremlin" by Reuters via Yahoo News...but Reuters suddenly cut out the balanced part of the story.
  • 2 days Advancing Fundamental Drilling Science - Geothermal drilling successes offer potential gain for petroleum industry
  • 5 days What China is Learning from Russia's War in Ukraine and its Consequences
Russian Oil Revenues Soar Despite Sanctions

Russian Oil Revenues Soar Despite Sanctions

Despite suffering under a massive…

U.S. Shale Drillers Ask Service Providers For Major Price Cuts

U.S. shale oil companies have asked oilfield service providers for price cuts of at least 25 percent as they grapple with tanking oil prices and pessimistic oil demand forecasts, Reuters reports, citing industry executives and a letter sent to oilfield service companies.

Shale drillers have made their spending plans based on oil prices of between $55 and $65 a barrel of West Texas Intermediate, Reuters noted, so the recent dive benchmarks took shook them to the core. WTI was trading at $31.78 a barrel at the time of writing with no prospects to go much higher any time soon.

This is particularly bad news for producers who have not hedged their future production at higher prices, according to analysts, and these will soon sink into the red. In this situation, their only chance for short-term survival seems to be oilfield service providers once again cutting their prices as they did during the 2014-2016 price crisis.

Reuters quoted Parsley Energy’s chief executive David Del-Osso as saying the company had sent a letter to oilfield service companies asking them “to reconsider your pricing” and offer Parsley price cuts of at least 25 percent.

Parsley Energy and Marathon Oil were among the first to announce cuts in their spending plans. Parsley said it will idle three of its 15 active rigs while Marathon said it would cut its spending by 30 percent from last year.

More companies are likely to follow suit with such announcements: this time, unlike in 2014, the oil price crash was fast and brutal, and, more importantly, largely unexpected as most expected OPEC+ to agree deeper production cuts, as they had on three previous occasions.

Oilfield service providers were forced to cut their prices during the last crisis to keep afloat. As a result, they suffered more than exploration and production companies and took longer to recover from the fallout of lower oil prices. If history repeats itself, the industry is once again facing tough times ahead.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News