Amid record-high U.S. crude oil…
Europe is consuming large amounts…
Occidental Petroleum Corp. will not be increasing oil output, with its CEO saying that the recent surge in oil to above $90 per barrel is happening without balance in the market.
Speaking on Bloomberg Television, Occidental CEO Vicki Hollub said, “Only in a market where we see balance would we increase our oil production – and even then it would be at a moderate pace.”
Even if oil prices topped $100 per barrel, Hollub told Bloomberg, they would not likely be sustainable long enough to lead to demand destruction.
Hollub cited the shale industry’s new-found discipline to hold off on production increases that at the height of the sale boom led to drillers taking advantage of high per-barrel prices in the short-term by raising output significantly, leading to a market oversupply problem.
Shale investors are more interested in increased dividends than they are in production growth, this time around, and Ninepoint Energy Fund manager Eric Nuttall sees today’s soaring oil prices as an indication of higher dividends and more buybacks to come from oil companies, as high crude prices create more free cash flow.
“You need not be bullish on higher oil prices for these companies to do phenomenally well,” Nuttall said. “You can buy into a sector with their strongest balance sheets in history, highest free cash flow in history, and an imminent pivot towards more meaningful buybacks and dividends.”
Enverus Intelligence Research (EIR), a subsidiary of Enverus, said in an August report that U.S. shale production decline curves had steepened significantly since 2010, and are set to steepen further.
“The U.S. shale industry has been massively successful, roughly doubling the production out of the average oil well over the last decade, but that trend has slowed in recent years,” the report’s authors noted.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com