Crude prices are likely to near $50/bl through this year and next, a panel of chief executives of US independent producers said
The price will swing between gains and losses around $50/bl as supply and demand gradually returns to balance and producers, particularly those in the US unconventional industry, seek to stay within cash flow. A host of other factors like lack of manpower and equipment such as US shale fracturing fleet will keep them from quickly ramping up activity.
"We don't run our business today hoping for $60-$70/bl oil," Chesapeake Energy's chief executive Doug Lawler said, speaking at a conference organized by the federal reserve banks of Kansas City, Kansas, and Dallas, Texas.
Key Permian producer Pioneer Natural Resources' chief executive Tim Dove said the company is making investment decisions, based on prices continuing to stay within "a price band $50/bl, plus or minus." But there are uncertainties in the market outlook because of which the company is limiting its corporate planning to the end of next year.
Uncertainties include the growing inventory of drilled but uncompleted (DUCs), wherein producers are drilling but not bringing them online, in most large basins, but more particularly in the Permian basin, spread across Texas and New Mexico. "DUC wells are building because we cannot enough people, frack fleet," Dove said.
If all the inventory of DUCs comes online, they will increase US output straightaway by 50,000 b/d, he said.
The number of DUC wells in major US shale basins topped 7,000 in August, according to new data from US Energy Information Administration (EIA).
The number of DUC wells in the seven basins increased by 231 in August to 7,048, the agency said in its monthly Drilling Productivity Report. Permian DUC wells, in west Texas and eastern New Mexico, accounted for about one-third of the total, rising by 133 to 2,297.
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