Page 10 - LatAmOil Week 02 2021

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The Kingdom’s energy minister, Prince Abdu- But US shale drillers – which have become
laziz bin Salman, apparently took everyone by known for their ability to respond quickly to
surprise when he announced a 1mn bpd produc- oil price fluctuations, are treating the rally with
tion cut for February and March, following Rus- caution. Indeed, a handful of shale company
sia and Kazakhstan being given room to make CEOs have pledged restraint over the past few
small increases. days, including the heads of Devon Energy, Pio-
While Saudi output will be reduced to neer Natural Resources, Occidental Petroleum,
8.119mn bpd, Iran has continued announcing Cimarex Energy and Ovintiv.
contract awards to local firms as the Islamic Occidental’s president and CEO, Vicki Hol-
Republic seeks to raise its own production by lub, has said her company’s focus is currently
around 355,000 bpd, and has committed nearly on debt reduction – unsurprisingly given the
$3bn to the endeavour. The latest set of contract company’s high debt load following its acquisi-
awards are for mainly smaller fields, having pre- tion of Anadarko Petroleum for $38bn in 2019.
viously focused on larger assets. Devon, which just completed its acquisition of Iran has
Meanwhile, Tehran is anticipating comple- WPX Energy, is aiming to keep production flat
tion to be reached shortly on the first devel- compared with levels it achieved in the fourth continued
opment phase of the Azar oilfield, allowing quarter of 2020. And Ovintiv’s CEO, Doug Sut-
production from the field to expand to 65,000 tles, described flat production as being “the new announcing
bpd. The project has been stuck at 97% since growth” during a virtual conference hosted by
October, with a cumulative total of more than Goldman Sachs last week, calling for the shale contract awards
$1.7bn having been spent so far. industry to show discipline. to local firms as
To the west, neighbouring Iraq is in talks with This was echoed by Cimarex’s CEO, Thomas
Jordan over the renewal of their crude supply Jorden, who said during the Goldman Sachs it seeks to raise
agreement that was signed in February 2019, event that his company would be “highly disci-
providing for the export of 10,000 bpd of oil plined in setting a budget”. oil production
to be trucked from Iraq’s Baiji refinery into the Pioneer, for its part, is maintaining its initial
Hashemite kingdom. production growth target of just 5%, unchanged by about
despite Saudi Arabia’s production cut. 355,000 bpd
If you’d like to read more about the key events shaping “I never anticipate growing above 5% under
the Middle East’s oil and gas sector then please click any conditions,” Sheffield said during the Gold-
here for NewsBase’s MEOG Monitor. man Sachs event. “Even if oil went to $100 a bar-
rel and the world was short of supply,” he said,
NorthAmOil: Shale drillers cautious the economics would not support adding rigs
Oil prices have rallied, reaching levels not seen because service costs would cut into margins.
since February 2020, with West Texas Interme- Given the ongoing wave of shale industry
diate trading above $52 per barrel as of January consolidation, there are fewer companies left to
12. This is partly the result of OPEC and its allies buck the trend in any meaningful way.
reaching an agreement last week that will see an
overall production cut extended until April, led If you’d like to read more about the key events shaping
by Saudi Arabia even as some other members of the North American oil and gas sector then please click
the group raise their output. here for NewsBase’s NorthAmOil Monitor.™

P10 www. NEWSBASE .com Week 02 14•January•2021