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Tags: permian | drillers | slash | output | oil

Permian Drillers Slash Output Even More After Oil's Collapse

Permian Drillers Slash Output Even More After Oil's Collapse
(Oleg Romanciuk/Dreamstime)

Monday, 04 May 2020 05:48 PM EDT

Diamondback Energy Inc. and Centennial Resource Development Inc. became the latest Permian Basin shale producers to say they were curtailing output in response to a collapse in crude prices.

Midland, Texas-based Diamondback is curbing 10%-15% of its May production, the company said in an earnings statement after the market closed Monday. Centennial, which started as a blank-check company backed by private equity firm Riverstone Holdings LLC, is curtailing up to 40% of output this month and suspending all drilling and fracking.

A pandemic-fueled crash in oil prices has been so severe that producers have moved beyond laying down drilling rigs to shutting in existing output.

Exxon Mobil Corp., Chevron Corp. and ConocoPhillips plan to curb as much as 660,000 barrels a day of combined American output by the end of June. Permian Basin producer Concho Resources Inc. has shut in about 4% to 5% of total output and warned last week that it will likely be forced to curtail even more.

Diamondback said it’s currently running 14 rigs but would reduce the number to eight by the start of the third quarter. The company will average “less than one” fracking crew in this quarter, according to the statement.

The decision to curb output comes as Texas decides against state-mandated quotas, which Diamondback had been ardently against. Earlier on Monday, the Texas Railroad commissioner who had been most in favor of such cuts said that plan was “dead.”

Diamondback Chief Executive Officer Travis Stice called the proposal a “distraction” in the statement. “Diamondback is choosing to curtail production in May because of economics, which should be the baseline for decisions on whether or not to produce barrels,” he said.

Among oil companies, Pioneer Natural Resources Co. and Parsley Energy Inc., founded by a father and his son, had been the biggest champions of instituting mandated cuts. Parsley also reported earnings Monday afternoon. It’s suspending all new drilling and frack work.

© Copyright 2022 Bloomberg News. All rights reserved.


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Diamondback Energy Inc. and Centennial Resource Development Inc. became the latest Permian Basin shale producers to say they were curtailing output in response to a collapse in crude prices.
permian, drillers, slash, output, oil
319
2020-48-04
Monday, 04 May 2020 05:48 PM
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