By David Wethe
Up until last week, West Texas Intermediate hadn’t settled above $45 a barrel since early March as the pandemic all but crushed demand. Faced with unprecedented pressure from investors to return profits to shareholders, the industry is in cost-cutting mode.
For an explorer to turn a profit in the Permian’s Delaware, the lowest-cost U.S. basin, a current oil price of $33 a barrel is required, down from $40 in 2019, the release showed. So-called breakevens refer to the cost of bringing supplies online that’s less than or equal to the expected revenue.
“Contract renegotiations, ongoing efficiency gains and process improvements have allowed the oil industry to slash the cost to drill and complete a well,” according to the report. “Most U.S. oil companies have also been able to lower their operating and administration expenses.”
U.S. oil output is expected to close out next year at about 11 million barrels a day, about the same as it is now, based on forecasts from IHS Markit, Rystad Energy, Enverus and the U.S. Energy Information Administration.
Crude rose 1% to $45.71 as of 1:49 p.m. in New York on Thursday.