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U.S. shale producers intend to meet oil demand, but not exceed it, so they are adjusting their production growth accordingly, shale pioneer and the chairman and chief executive of Continental Resources, Harold Hamm, told CNBC on Thursday.
The growth projectile has slowed down the last year, Hamm told CNBC’s show ‘Squawk on the Street’.
“One thing you can’t do is get ahead of market, we want to meet demand, but getting ahead of it is not a good thing and we’ve seen the result of that,” Hamm said.
Surging oil supply from the U.S., coupled with faltering global oil demand growth, has put a lid on oil prices this year, despite efforts from OPEC and its allies to prevent an oversupply and prop up prices.
“The public market has told us that this is not it’s going to pay for—a lot of growth we don’t need, and so oil companies have readjusted the percentage of growth that they have,” Hamm said.
“We intend to meet demand, but not exceed it,” he noted.
As far as well efficiencies are concerned, the U.S. may be reaching the top of the curve, but there is still a lot of room for growth in America’s oil fields, the shale pioneer said.
Despite the currently slower growth, Hamm thinks that the U.S. could eventually reach more than 15 million bpd of oil production, although it would be years until this threshold is reached.
U.S. shale producers need to slow down with production growth and focus more on capital discipline in an oversupplied market, Hamm told the audience at the EnerCom conference earlier this month.
Hamm was one of the few voices of caution two years ago as well, when OPEC started cutting production for the first time to reverse the relentless fall in prices. Despite Hamm’s calls for moderation, however, the OPEC cuts resulted in a surge in U.S. oil production. Now, Hamm says, this surge is hurting prices and therefore profits.
“Capital discipline is more important now than at any time I’ve seen it. We can oversupply the market, and we have,” Hamm said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.