Pioneer CEO sees oil above $100 as a net negative for shale

David Wethe 1/5/2022

HOUSTON (Bloomberg) --Bosses for some of the biggest oil explorers in the Permian Basin say their industry could be hurt if crude climbs above $100 a barrel.

With an expectation that oil demand exceeds supply by later in the year or in early 2023, Scott Sheffield, chief executive officer at Pioneer Natural Resources Co., said he sees oil prices to be in the range of $75 to as much as $100.

“I hope it stays there,” he said Wednesday in a Goldman Sachs Group Inc. energy conference webcast. Sheffield added that “$110, $120 oil or higher, like what Europe is seeing, is not going to help our industry.”

While activity in the U.S. showed no sign of slowing down at the end of last year, public explorers in the world’s biggest shale patch are continuing to preach the new mantra of restricting production growth so they can send more profits back to investors. Diamondback Energy Inc. and Devon Energy Corp. executives said on the same webcast panel that they’d need to see shareholder sentiment change to increase output again.

The global oil industry has yet to fully climb back from the boom era of $100 oil since tumbling more than seven years ago. Ed Morse, global head of commodities research at Citigroup Inc., said Wednesday in a Bloomberg Television interview that even if crude climbs back to those levels, it wouldn’t stay there long.

Travis Stice, chief executive officer for Diamondback, agreed that oil higher than $100 wouldn’t be good for the industry as it could be seen as a signal for production growth again. But right now, he said shareholders are still saying they don’t want to see oil explorers boost output.

“Eighteen months ago, we were in a global apocalypse for the energy sector, and now you’re talking about outsized returns,” Stice said. “We should all pause and recognize the Tectonic shifts that is in capital allocation.”

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