$50 Oil Means Stability to American Producers, Says Canary CEO
HOUSTON, May 26, 2016 /PRNewswire/ -- The history of the oil industry is a tale of boom and bust cycles. But when oil climbed to $50 per barrel for the first time since last fall, it may have signaled the end of one of most protracted slumps American producers have seen, says Dan K. Eberhart, CEO, Canary, LLC.
During the historic price collapse of the 1980s, oil fell to about $25 per barrel in 2016 dollars, while this time, oil bottomed out at $26.21 per barrel in February.
The rise to $50-per-barrel oil means a return to stability, particularly for domestic shale producers, according to Eberhart. At this level, companies that saw the value of their product drop more than 75 percent in less than two years might have the confidence to resume drilling activities – and the resources to begin repairing ailing balance sheets.
ITG Investment Research concluded that in a few areas in the Eagle Ford shale and Permian Basin in Texas, drilling was possible even if crude prices dropped to $25 per barrel. However, a period of sub-$50 prices squeezed operating costs and idled rigs, although efficiency gains allowed production to increase even as the rig count continued to fall.
Eberhart says the supply glut that drove prices down since mid-2014 has been tempered by supply drawdowns related to the wildfires in Canada and the criminal activities of rebels in Nigeria. As a result, worldwide production in May is down nearly 4 million barrels per day.
Higher prices have already had on effect on Energy Information Administration (EIA) projections, Eberhart says. The agency originally said that U.S. crude output would fall to 8.2 million barrels per day by 2017. Since then it has revised its forecast, reducing the projected drop by 100,000 barrels per day.
"I think we're moving into a period of greater stability for American producers," Eberhart says. "With oil prices at $50 or better, shale producers in particular will have the ability to restart operations."
About Canary, LLC
After ten acquisitions and seven decades, Canary, LLC, is now one of the largest private wellhead service company in North America and one of Inc. Magazine's 5000 fastest growing U.S. companies. Canary serves its clients and the public through quality drilling and production services, local charitable endeavors, and educational campaigns concerning energy policies. Check out Canary at canaryUSA.com, fb.com/CanaryConnects, or @CanaryConnects
Photo - http://photos.prnewswire.com/prnh/20160526/372539
SOURCE Canary, LLC
Related Links
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article