Whiting Petroleum would add rigs in ND if oil prices hit $70 per barrel
WILLISTON, N.D. - Whiting Petroleum Corp , the top oil producer in North Dakota, plans to keep 11 drilling rigs operating through 2016, though it would add "a couple of rigs" if crude prices rise to $70 a barrel, its chief executive said on Thursday.
The comments from CEO Jim Volker were among the most definitive yet from a leader of a big crude producer on what threshold is needed to start fresh drilling and curb recent pullbacks that have rocked the oil sector since prices started to drop last summer.
Thus far this quarter, executives at industry peers have sent mixed messages on adding new rigs. Hess Corp, for example, does not plan to add any rigs this year, while Pioneer Natural Resources Co told Reuters last week that it was considering adding rigs in the near future.
Oil prices have gained more than 15 percent in the past month to $59 a barrel for benchmark West Texas Intermediate , enticing the sector with hopes of a sustained rebound.
"If we were to see $70 oil, which is basically $10 above where we are today, you'd probably see us put a couple of rigs back," Volker told investors on a Thursday conference call.
It would be a stark turnaround for the company, which spent $27 million in the first quarter to exit existing drilling rig contracts early.
"Some of the rigs that we've released we can get back and sort of pick up quickly as a result of the way in which our contracts were written," Volker added to investors, trying to assuage concerns that the start-and-stop cycle could damage relationships with contractors.
Indeed, Volker said oilfield service companies "have responded quickly and decisively" to requests to cut costs, and reiterated past comments that Whiting can thrive even at $50 per barrel oil prices.
Seeking to highlight Whiting's ability to keep production high even while containing costs, Volker announced the company's capital budget for 2016, outlining spending of $1.5 billion, about 25 percent less than 2015.
It was an especially early announcement considering 2015 spending levels at Whiting weren't announced until late February.
Shares of Denver-based Whiting jumped 3.3 percent in afternoon Thursday trading, erasing earlier losses. Meanwhile, crude oil prices gained about 1.5 percent.