Bakken Shale producer Oasis Petroleum unveiled a rough capital
spending plan on Thursday that would allow production to slide 1%-9%
in 2016 while spending 33% less than last year, a move largely
prompted by lower oil prices.
Oasis, one of the larger Bakken operators in the North Dakota and
Montana play, expects to produce 46,000-50,000 b/d of oil equivalent
there this year, down from 50,477 boe/d in 2015, the company said in
a statement.
With a midpoint of 48,000 boe/d eyed for 2016, production would drop
5%. That "implies a 5% year-over-year overall production decline,"
Guggenheim analyst Subash Chandra said in a Thursday investor note.
Still, last year's 50,477 boe/d of output was 11% higher than in
2014, Oasis said.
So far, most companies that have released capital budgets for
2016 also expect lower year-on-year output, unlike last year, when
operators boasted of being able to grow production on less spending.
But a year and a half of low oil prices have forced oil companies to
largely live within their cash flows in 2016.
Oasis' planned capex for 2016 is $410 million, including $180
million-$230 million for well drilling and completions. That is down
from $610 million actually spent and $670 million projected.
This week, four independent upstream oil companies released 2016
capex that was 40%-66% lower than last year. The magnitude of those
year-on-year budget cuts was far more than the 25% that larger
companies, including ConocoPhillips and Chevron, unveiled in their
preliminary capital plans in December.
Since then, oil prices dipped from the high $30s/b into the $20s/b
and are now hovering around the $30/b mark. As a result, analysts
believe companies could revise their 2016 budgets downward.
In mid-morning trading on Thursday, NYMEX March crude was up $1.27
to $33.57/b.
Oasis CEO Thomas Nusz suggested that high-intensity well
completions, which fracture more rock along the horizontal well leg
to access more of the reservoir, was also part of the reason the
company set this year's capex as low as it did.
"We have seen well results continue to improve while at the same
time well costs have continued to decline with operational
improvement and service cost optimization," Nusz said.
--Starr Spencer,
starr.spencer@platts.com
--Edited by Derek Sands,
derek.sands@platts.com
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