Saying the companies with strong balance sheets
All three advised conserving cash and making sure balance sheets are strong, saying the companies with strong balance sheets are the ones that will come through a downturn in the best shape.
Pruett noted that $30 billion has been invested so far in the Permian Basin in terms of drilling and midstream infrastructure.
“I hope you’re impressed with the amount of capital it takes,” he said.
Momentum will continue driving activity even if prices continue to decline, Pruett said. “You can’t shut down drilling rigs overnight.”
His company has contracted with Independent Contract Drilling and intends to run three rigs next year “irrespective of price.”
“The Permian Basin won’t shut down, but some fringe acreage might not be drilled,” he said.
Producers are not the only ones watching oil prices. Service companies are also wondering what direction prices will be taking.
“If prices continue going down, there will be a slowing of activity,” said Clint Walker, general manager, CUDD Energy Services.
Like the three CEOs, he advocates strong balance sheets, saying they will get a company through tough times.
“And I can’t emphasize enough the value of your people. They’ll help through a downturn, too,” he said.
James Newman, senior vice president of region operations at Basic Energy Services, said his company is not quite as impacted by falling oil prices because a good portion of Basic’s business is production maintenance services.