How many US companies survive the $ 35 / barrel threshold?
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How many US companies survive the $ 35 / barrel threshold?


Reuter cited figures from energy consulting firm Rystad that a series of US shale oil producers had to close some expensive drilling rigs and cut staff numbers.

How many US companies still pay 35 USD / ton?
Many US oil rigs can’t stand the price of 30 USD / barrel.

Many shale wells can withstand the cost if the oil price stays at 55-65 USD / barrel. But until now, when prices have dropped more than $ 20 a barrel, they have no other way.

The US shale oil industry is on track to grow once again facing a crisis since 2014 when OPEC leaders made a price war on oil. At the same time, sophisticated mining technology, which helped lower funding, helped shale producers survive.

But so far, companies that can survive the crisis of oil prices in early 2020 are few.

Rystad said only about 16 US shale companies operate in lucrative areas if oil prices are $ 35 per barrel. Among them are Chevron Corp, Devon Energy Corp and EOG Resources designed the spending cuts.

The largest US oil producer, Exxon Mobil Corp, made a profit of $ 26.90 per barrel for drilling rigs in New Mexico, accounting for about a quarter of their stake in the Permian Basin – shale field. America’s largest.

Meanwhile, Occidental Petroleum Company and CrownQuest Private Group operate both cost less than 30 USD / barrel, according to Rystad Energy.

However, this is only the output cost and if based only on this, the manufacturer will lack dividend money.

In North Dakota, there are only 6 producers who can cover costs at the $ 30 / barrel oil market. While in the Permian mine, there may be more, about 12 companies.

Head of research at Rystad Energy, Artem Abramov, said most of US shale production was “at risk at current oil prices” and the new drilling projects were likely to “stall”. relatively quickly “.

Meanwhile, Stephen Richardson, shale analyst at Evercore ISI, was more pessimistic: “There is no good answer for a $ 30-barrel oil-bearing industry. Let’s not deceive ourselves. All the option is not economical “.

The White House is saving the US energy industry

Bloomberg reported that the US will start to buy crude oil from the Strategic Petroleum Reserve within the next 2 weeks, with an expected volume of 77 million barrels.

The move follows US President Donald Trump’s announcement that the government will take advantage of low oil prices in the market to buy large quantities of additional crude oil into the National Strategic Petroleum Reserve.

In the meantime, oil from the Strategic Store will be provided to support the local oil and gas industry.

According to the US President, buying goods at current market prices saves billions of dollars for US taxpayers.

According to Bloomberg calculations with oil prices closed last Friday, if the US government bought 77 million barrels of crude oil, it would cost about US $ 2.4 billion.

Strategic oil reserves are capable of storing 713.5 million barrels of crude oil. Currently at about 635 million. Three years ago, some lawmakers thought it might be time to stop stockpiling oil because of the rapid increase in domestic production as well as reduced exports.

At the same time, however, many argued that stockpiling is still needed to respond to market changes. The latest action of the Trump administration shows that this is not wrong.

The secondary purpose of strategic oil reserves is to bail out struggling shale producers.

But the question is whether this number is enough to bail out the US shale industry.

According to OilPrice, independent shale companies with affordable budgets must be much higher than the current $ 30 a barrel.

Many companies have had to cut back on spending due to the effects of the COVID-19 epidemic, which is requiring US oil suppliers to lower prices further. At least one company, Pars Parsley Energy, has asked oilfield service providers to lower their prices by at least 25%.

Meanwhile, fund managers and investment banks expect oil demand to fall to an annual record, possibly falling by more than 2.65 million barrels a day, which was recorded in 1980.

The US government is trying to save both the economy facing oil price crisis and the stock market plunge.

Hai Lam

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