December 26-2014
The first major oil firm has blinked as a result of OPEC’s refusal to cut output; ConocoPhillips has announced it will cut its spending to drill new wells by 20 percent in 2015.
This is what Saudi Arabia said it is counting on to bring oil prices back up.
But while ConocoPhillips will cut its drilling expenditures by 20 percent compared to 2014, it will still be spending $13.5 billion in 2015 to bring more oil to the market.
The firm said its reductions mainly reflect lower spending on projects nearing completion, which won’t reduce output, plus deferral of spending on North American shale oil development, which likely will impact output.
ConocoPhillips also said that, even after the reduction, its oil and gas production would increase by 3 percent in 2015 compared to 2014.
Amrita Sen, chief oil market analysts at Energy Aspects, a consultancy, told a conference in Dubai that US shale oil production growth—growth, not output—may well slow down, but not until the second half of next year and 2016.
But that means shale oil output will continue to rise, just at a slower rate than now anticipated.
Furthermore, Ed Morse, head of commodities research at Citigroup, told the Dubai conference that US sale oil production would climb at a higher rate than anticipated because the rate of decline from wells now in production has been overstated.