Crude at $80 a Barrel? No Sweat, Say Oil Producer CEOs

[Purveyor]

By Joe Carroll and David Wethe Oct 28, 2014 12:33 PM ET

U.S. energy companies are shrugging off a 24 percent plunge in oil prices, confident they can adapt and still make money.

Amid predictions that the biggest drop in crude prices since the global financial crisis six years ago will choke off cash flow and slow drilling, industry leaders are reassuring investors they still have the means to return ample profits. Improved technology is bringing down costs and most shale producers operate in multiple basins, allowing them to shift work to the most profitable sites.

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Past Resilience

The oil industry already has demonstrated it can generate solid profit at lower prices. The last time New York crude futures dipped below $80 was June 2012, in a quarter when Chevron Corp., Occidental Petroleum Corp. and Royal Dutch Shell Plc reported returns on capital between 13 percent and 16 percent, according to data compiled by Bloomberg.

“We think there’s a lot of economic oil at $75, economic meaning we earn 15 percent, 16 percent, 17 percent returns,” Occidental CEO Stephen Chazen said during a conference call with analysts Oct. 23. “Do I think there’s a lot of economic oil at $50? No, I don’t.”

Harold Hamm, the Oklahoma billionaire who built his fortune by drilling sideways and using hydraulic fracturing to pull oil from North Dakota shale fields, said prices could fall another $30 a barrel before he’d start worrying.

“We can produce down to $50 a barrel,” said Hamm in a recent interview with Bloomberg News. Hamm told CNBC today that his Continental Resources Corp. (CLR) hasn’t yet altered any drilling schedules in response to the drop in crude prices.

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http://www.bloomberg.com/news/2014-10-28/crude-at-80-a-barrel-no-sweat-say-oil-producer-ceos.html

[belzabubba333]

1. that's where the saudi's want to take it, drive it down run the us producers out of business

then raise it high

[louis-t]

2. agreed

Otherwise, they would be cutting production. Our wonderful friends in the House of Saud...who want to destroy us.

[belzabubba333]

4. remember the nationality of most of the 911 hijackers were saudi

19 of the 21

[louis-t]

5. I think it was 15, but there you have it.

Funded and trained in their own country.

[belzabubba333]

6. youre correct 19 was the number of hijackers 15 of whom were saudis

[Skink]

3. That will put a stop to fracking