July 17, 2017
Though large companies have been charging full speed ahead in the Permian Basin of West Texas, smaller oil producers, feeling the effects of falling oil prices, are sending signals that things could stall. The smaller firms are indicating that they could postpone exploration and production, slow hiring, and spend less on oil field services.
OPEC and its partners promised to cut output by 1.8 million barrels a day, but oil prices are stubborn to rebound, having fallen 20% since reaching a high of $54 a barrel in February 2017. Drilling rig growth in the Permian Basin has flattened.
Wood MacKenzie analyst R.T. Dukes told the Houston Chronicle that smaller oil companies are providing an early sign of what could be ahead if the low prices persist. “The bigs guys have some aggressive plans, but they’ll slow those down, and under $40 a barrel, they’d start to cut back,” he said.
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