Bakken drilling faces pause as Harold Hamm cites shrinking margins
(Bloomberg) – Harold Hamm, the billionaire wildcatter who helped kick off the U.S. shale oil revolution, said he’s about to shut down drilling in North Dakota’s Bakken for the first time in decades because of low crude prices.
“This will be the first time in over 30 years that Harold Hamm has not had an operation with drilling rigs in North Dakota,” Hamm, the founder of shale driller Continental Resources Inc., said in a telephone interview Thursday. “There’s no need to drill it when margins are basically gone.”
It’s a significant milestone for the Bakken. The shale patch in North Dakota is where Hamm, 80, first proved that drilling and fracking techniques could be successfully applied to previously untouchable oil reserves. The fracking revolution ushered in a new growth era in U.S. oil and the country went on to become the world’s top producer.
The average well in the Bakken requires a minimum of $58 a barrel to cover costs and generate a small profit, according to a report from BloombergNEF. That’s up almost 4% from a year earlier, largely due to escalating expenses for drillers.
Meanwhile global oil prices have steadily declined in the past several months on expectations of a glut. West Texas Intermediate, the U.S. benchmark, has fallen 26% over the past year, settling at $59.19 on Thursday.
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The number of rigs drilling across the U.S. has dropped by 15% over the past year, led by the cutting of 60 rigs in the Permian basin, the largest and most productive U.S. oil basin.
“A lot of people are assessing their activity in all the basins,” said Hamm, who also has oilfield assets in Oklahoma and Texas, among other locations.
Still, Hamm left the door open to return to drilling in the Bakken at some point, depending on prices.
“We’re price takers, as you’re aware — not price makers,” he said with a laugh. “See what we can get.”
