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Small Permian producers flashing warnings as oil remains cheap

Written by Colin Eaton at the Houston Chronicle

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In many ways, the economic impact of falling oil prices stung worse in West Texas than it did in Houston, which lost tens of thousands of jobs in the throes of the oil bust. “It was a bloodbath out there,” said Karr Ingham, a Texas economist based in Amarillo. “There’s a recovery in full swing down there, but the elephant in the room is oil prices. The bigger guys are still spending, but they’re going to stall out at some point. And they’re in the process of doing that.” For small firms that depend on razor-thin margins to make ends meet, the economics of the oil patch have fallen apart in a matter of weeks. If crude remains cheap, Fasken Oil & Ranch, a small Midland oil producer, may have to “cut back pretty significantly,” possibly pausing plans to run two or three rigs this year, even though it owns the mineral rights on its acreage and doesn’t have to pay royalties as most firms do, said Tommy Taylor, director of oil and gas development at Fasken.

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Written by Colin Eaton at the Houston Chronicle

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