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Oil Prices Rebound On Small Crude Draw

Oil Prices Rebound On Small Crude Draw

Oil prices rebounded today after…

Colombia’s Oil Major Plans To Drill 100 Wells In The Permian

Colombia’s state-held oil firm Ecopetrol, which has a strategic alliance with Occidental Petroleum to develop acreage in the Permian, plans to have drilled as many as 100 wells in the most prolific U.S. shale basin by the end of 2021, Ecopetrol’s CEO Felipe Bayon told a conference on Monday.

“By the end of next year, we should have over a hundred wells,” Bayon said at a virtual conference, as carried by Reuters.  

Last year, Ecopetrol and Occidental Petroleum Corp agreed to set up a strategic joint venture to develop unconventional reservoirs in approximately 97,000 acres of the Permian Basin in West Texas.

This deal was part of Ecopetrol’s strategic priorities to develop more unconventional resources and have more operations outside Colombia, the company said in November 2019.

Between November last year and June this year, Ecopetrol drilled 22 wells. However, oil production has slowed because of the oil demand and price crash in the pandemic, according to Bayon.

Despite the current low oil prices, Ecopetrol expects to have 100 wells drilled in the Permian by the end of next year, said the company’s executive.

Light crude from shale formations fits well into Ecopetrol’s plans to balance its crude slate portfolio, which consists of predominantly heavy crude varieties, Bayon said at the Asia Pacific Petroleum Conference (APPEC).

Ecopetrol hasn’t shut down oil production due to the crash in demand in the pandemic because demand from Chinese refiners, some of whom use Colombian crude to meet baseload demand, was decent.

Related: Tropical Storm Sally Forces Drillers To Evacuate Gulf Of Mexico Oil Platforms

The Colombian oil firm is looking to sell more of its crude to other major oil importers in Asia— India and South Korea in particular, Bayon said at the conference.

Meanwhile, in the Permian, the number of drilled but uncompleted wells jumped to 3,520 in July 2020, while all other U.S. basins had 4,165 DUCs as of July, the Dallas Fed said earlier this month.

The breakeven price for drilling new wells is an average of $46 a barrel WTI in the Midland area in the Permian, according to Dallas Fed’s survey among oil executives. The responses for the Permian (Midland) breakeven range from as low as $30 to as high as $60 a barrel.

By Charles Kennedy for Oilprice.com

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