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Oil’s Magic Number Becomes $50 a Barrel for Promise of Recovery


The new magic number in the oil industry is $50.

BP Plc, rig-owner Nabors Industries Ltd. and explorer Pioneer Natural Resources Co. all said in the past 24 hours that prices above $50 will encourage more drilling or provide the needed boost to cash flow. With oil bouncing close to $45 a barrel, an industry that has been shaving costs to stay competitive is ready for signs of stability at a price level less than half of 2014’s average.

At an average price of $53 per barrel of oil means the world’s 50 biggest publicly traded companies in the industry can stop bleeding cash, according to oilfield consultant Wood Mackenzie Ltd. Nabors, which owns the world’s largest fleet of onshore drilling rigs, said it has already been talking with several large customers about plans to boost work in the second half of the year if prices rise “comfortably” above $50.

“It’s not just about touching $50,” Fraser McKay, vice president of corporate analysis at Wood Mackenzie in Houston, said Tuesday in a phone interview. “It’s about touching, maintaining and having the perception of future prices above $50 a barrel before you start sanctioning projects that are economic at $50 a barrel.”

Spending Cuts

The global oil industry slashed more than $100 billion in spending last year and is in the midst of further cuts this year to survive what Schlumberger Ltd. has called the industry’s worst-ever financial crisis. In North America alone, spending is expected to drop by half from last year.

Prices have rebounded by about two-thirds from a 12-year low, with Brent, the international crude benchmark, trading above $45 a barrel Tuesday. The rally has explorers from BP to Pioneer looking ahead to an eventual recovery as they release first quarter earnings this week. Next year, BP will be able to balance cash flow with shareholder payouts and capital spending at an oil price of $50 to $55 a barrel, down from a previous estimate of $60, the London-based explorer said. Pioneer expects to add as many as 10 horizontal drilling rigs when oil reaches $50 and the outlook for supply and demand of crude is positive, the company said Monday in its earnings statement.

For every $5 that oil prices climb, above a baseline of $37, Continental Resources Inc. adds another roughly $200 million in revenue, Chief Operating Officer Jack Stark said last month in an interview in New Orleans. By the time oil prices reach $52, the Oklahoma City-based explorer would probably look at adding more rigs, he said.

“We won’t chase price spikes,” Stark said. “We’re committed to being patient.”

Failed Rally

Yet even talk of ramping up again is bringing a stinging reminder of last year’s failed attempt to restart activity too quickly after oil prices rose.

“We got out ahead of ourselves — bit of a head fake there,” Tony Petrello, chief executive at Nabors, told analysts and investors Tuesday on a conference call. “We’re going to be a little more guarded here.”

Exactly when oil prices hit that level and how long they need to stay there is a question no one can say for sure. Nabors said the activity could start up in the middle of the third quarter or into the final three months of this year. Continental estimated that supply and demand could be nearing balance later this year and be “absolutely in balance” or in need of more oil next year.

“The absolute timing may be off a bit,” Stark said, “but ultimately it’s going to happen.”


81 Comments on "Oil’s Magic Number Becomes $50 a Barrel for Promise of Recovery"

  1. makati1 on Fri, 29th Apr 2016 7:27 pm 

    shortonoil, yes, there is a lot of differing viewpoints out there that shed light on the real world. How can you see the real world from only one filtered, highly propagandized source? Answer: You cannot.

    I keep advising the narrow minded here that they need to read many articles, on the same topic, from many sources to get a fairly clear picture of today. You will not get it from the US MSM Iron Curtain sources. Not even close.

    News began being censored in WW1 when the bad news was going to end the war too soon, or the politicians career, if the populace knew their country was losing and why. It may have been censored long before, but the newspaper and the radio reached too many people for the truth to be allowed.

    Now we have the internet, which is difficult to control. I suspect we still only get part of the picture because there are so many lies coming out of countries these days. It took me a few years of internet use after I bought my first PC (2004) to see how I was being lied to by my own government(US). I took the blinders and pink glasses off, put down the cool aid and moved out of the country. Best decision I ever made. Well, maybe second best. I had divorced a different kind of ‘reality’ a few years earlier. LOL.

    Reality is a bitch …

  2. GregT on Fri, 29th Apr 2016 8:37 pm 

    “North Korea is the best at it. Lol”

    Glad you found a reliable source of info Boat. Most of us here in the West don’t have access, and even if we did, most of us don’t read Korean.

    So for the rest of us, we’ll just have to make do with the Western corporately controlled propaganda mill. AKA; The Associated Free Press.

  3. peakyeast on Fri, 29th Apr 2016 9:16 pm 

    Geo is right to some extent at least.

    I remember back in they hey-day when google was new – the results were fantastic. Today I have to be much more specific to find certain news or content I want – otherwise the results are drowned in trash – commercials, paid-to-be-at-the-top websites and so forth.

    Its no longer an algorithm to provide you with the best results – but instead the best paying marginally near the real results.

    Another case of a company grown too big and greedy and where everyone would be better off if it died quickly and horribly.

  4. peakyeast on Fri, 29th Apr 2016 9:23 pm 

    Oh yeah – and google today ASSUMES it knows what you want. And I fucking hate it – and its always wrong if you dont look for the mainstream idiocy or something with commercial interest.

    Perhaps its otherwise for other people – since its actively spying on both your emails and storing all your seaches and clicks.

  5. peakyeast on Fri, 29th Apr 2016 9:25 pm 

    Ooops. Somehow I posted the above at the wrong place.. Sorry.

  6. geopressure on Fri, 29th Apr 2016 9:47 pm 

    & anything that the powers that be want to keep hidden, Google simply fails to acknowledge it’s existence…

    I think that means that it is on the “Dark Web” or something…

    If I were to write an article about there being an oil shortage in the near term future, Google would not recognize it & no one would ever read it…

  7. geopressure on Fri, 29th Apr 2016 9:51 pm 

    I used to follow a good news agency out of Azerbaijan called Trend… they have an English version & they gave information on pipeline explosions & conflicts that were not available from any other news source that I could find…

    Unfortunitely, they were bought out about two weeks ago & now their content is filtered by the US Government just like every other English New Source…

    It’s really sad… to me at least… I want the facts, but they are so hard to come by these days…

  8. shortonoil on Sat, 30th Apr 2016 7:02 am 

    “Oh yeah – and google today ASSUMES it knows what you want. And I fucking hate it – and its always wrong if you dont look for the mainstream idiocy or something with commercial interest.”

    Google keeps a humongous file on everyone who uses the internet. Their algos use that to determine what you may like to see, and what advertiser will pay them to show you what you may like to see. In other words if they can’t get paid for it, you don’t see it! That filters out about 99% of the material that is available. To get around that you have to use a proxy server. There are many available out there, some of them are even free. Beware the free ones, most of them are using the same strategy that Google is using.

  9. shortonoil on Sat, 30th Apr 2016 7:25 am 

    Google is not the only service out there, even though they do control about 80% of the market. Dogpile does a pretty good job, and there are many others. You are also not limited to articles that are written in your native language. I read the Russian news all the time, but my Russian is somewhere on the level of deficient, to nonexistent. Translators, such as Babble Fish, are available for any language from Swahili to Chinese. It just takes time and patience to use them. Something that many don’t want to invest in. If someone remains ignorant it resulted from their own lack of incentive to be otherwise! Don’t blame the government for keeping you stupid, they are just working from the assumption that was the way that you wanted to be.

  10. Davy on Sat, 30th Apr 2016 8:18 am 

    Geeze, are you people unable to wade through the shit? I think anyone saying you can trust what the Russians say any more than any others is a joke. The Russians are masters of deception and always have been. The world is awash in agenda. The only thing you can do is eliminate agenda within yourself. This board is just as awash in agenda as Google, the Russians, Chinese, and the Americans. It comes down to you and your ability to understand and digest all sources and all sources at the same time. It is you that can go to the roots of life within yourself and from there walk out into the swamp knowing better for the difference between dumbass and gold nuggets of truth. No one on this board is without agenda. Some are pure agenda and that make me sick.

  11. Davy on Sat, 30th Apr 2016 8:35 am 

    “The Trump Test”
    “Anti-interventionism in the age of revolt”

    “This is why the Republican Establishment hates Trump: it’s no accident that the same neocons who lied us into the Iraq war and profited personally and professionally from that disastrous adventure are now in the vanguard of the “Never Trump” brigade. As Heilbrunn points out:
    “This is why perhaps his most significant statement was: ‘I will also look for talented experts with new approaches, and practical ideas, rather than surrounding myself with those who have perfect résumés but very little to brag about except responsibility for a long history of failed policies and continued losses at war.’ What Trump is talking about is dispensing with an entire wing of the GOP that has controlled the commanding heights of foreign policy over recent decades.”

  12. JuanP on Sat, 30th Apr 2016 9:05 am 

    WWIII has already begun,

  13. JuanP on Sat, 30th Apr 2016 9:10 am 

    I definitely think that the Russians are a lot more trustworthy than the Americans. I am not surprised at all that a deluded American exceptionalist like Davy would find that funny, but then I do think Davy is a sad joke, a bad excuse for a human being, and a prototypical full of shit deeply biased American bully. Does anyone in the world give a fuck what assholes like Davy believe other than other deluded American exceptionalist bullies?

  14. JuanP on Sat, 30th Apr 2016 9:14 am 

    Davy, I see you are blaming other posters on this forum for your illnesses, perversions, and diseases. That is not fair, Davy boy! You were a sick little pervert your whole life, long before this board existed. My guess is that you were born a pervert.

  15. makati1 on Sat, 30th Apr 2016 9:29 am 

    JuanP, Russia and China declared economic war on the Empire years ago. It may heat up to a shooting war if they cannot financially and economically cripple the Empire before it gets desperate. China is dumping dollars as fast as it can and building an alternate financial and economic system to give the rest of the world an alternate to Us dominated banks and systems. It is working and driving the PTB nuts.

    Putin does what he says and the whole world can see it. The Us lies and tries to cover up its shit but the whole world can see that also. The Us’ days are numbered.

  16. Boat on Sat, 30th Apr 2016 9:38 am 

    “Geeze, are you people unable to wade through the shit? I think anyone saying you can trust what the Russians say any more than any others is a joke.”

    The complaints against MSM and any country are just as laughable. We are continually wading through spin. We wade through spin from birth. One mans bullshyt is anothers mans truth.

  17. makati1 on Sat, 30th Apr 2016 10:00 am 

    Boat, you are definitely an expert on bullshit. You shovel a lot of it. Most countries still publish facts. The Us publishes bullshit 99.999% of the time. You only have to read some of it and compare it to the real world to see that fact. But the real world does not exist for most Americans. They prefer the lies because it makes them feel safe and cared for. LOL.

  18. Davy on Sat, 30th Apr 2016 10:10 am 

    Sure I do Juan P (p is for “I have a pussy”). It is called life and what is worse modern life which is insanity. So how do you expect to live sane other than being mentally ill. That is the paradox of modern life.

    You and I should be good friends, in fact back in the old day before you chose darkness I even invited you to my farm. That was back when we talk positive things like doom prep.

  19. Boat on Sat, 30th Apr 2016 10:39 am 


    You moved to a third world country. Enough said.

  20. apneaman on Sat, 30th Apr 2016 11:58 am 

    Boat, 3rd world? What’s the history behind that term?

  21. onlooker on Sat, 30th Apr 2016 12:02 pm 

    The term Third World arose during the Cold War to define countries that remained non-aligned with either NATO, or the Communist Bloc. — We in the US have become “third world”.

  22. Boat on Sat, 30th Apr 2016 12:02 pm 


    Schools over. Look it up.

  23. peakyeast on Sat, 30th Apr 2016 12:02 pm 

    Logic says that 3rd world is two versions better than 1st world? 🙂

  24. peakyeast on Sat, 30th Apr 2016 12:06 pm 

    @short: I have heard that Duck-Duck-Go should also be free of the evils that has beset google.

    Dogpile? Never heard about it as a search machine. I will see if google can find it for me 😀

  25. Boat on Sat, 30th Apr 2016 12:41 pm 


    If Trump wins we might be.

  26. shortonoil on Sat, 30th Apr 2016 4:04 pm 

    “Dogpile? Never heard about it as a search machine. I will see if google can find it for me”

  27. makati1 on Sat, 30th Apr 2016 7:31 pm 

    The ‘3rd world’ has a much better chance of surviving the coming apocalypse then the 1st world because they have less to lose and still retain the idea and skills of self-sufficiency. They already live the Apocalypse everyday. Manila will be abandoned but the rest of the country will survive as it has for thousands of years.

    Yes, I moved here for the freedoms and the nice people that my birth country, America, has lost.

  28. Davy on Sat, 30th Apr 2016 7:48 pm 

    Who, What, where?
    “The ‘3rd world’ has a much better chance of surviving the coming apocalypse then the 1st world because they have less to lose and still retain the idea and skills of self-sufficiency.”
    Generalizing about millions or Billions of people is something people with low IQ do. They are unable to treat topics with subtleties so they lump all issues in together. It works great for agendists with short rapid fire comments.

    I see little indication 3rd worlders are any better at survival than those in the 1st world. How do you compare the people and what skills are you talking about?

    The Philippines is a country the size of Arizona with a population a little less than 1/3 the US population. I need not say anymore because that is a classic case of overshoot. The country already has a failing ecosystem. Forest and fisheries are in collapse. It is a country with the crosshairs of climate change planted directly upon it. What a joke.

  29. Kenz300 on Sun, 1st May 2016 4:44 am 

    And how fast can Iran increase production in 2016-7

  30. ennui2 on Sun, 1st May 2016 11:48 pm 

    Every time I dip into the comments under news articles I see the same thing. The same 2-3 people taking personal snipes at each other. And along the way, the topic of the news is completely lost in the ad homs.

    As far as I’m concerned you guys are much more interested in throttling each other by the neck than actually discussing anything. And I find it interesting how few of you actually drop into the forum and communicate. You’d rather camp out here and pontificate and troll.

  31. apneaman on Mon, 2nd May 2016 12:45 am 

    pontificate and troll? You mean like you just did? You just don’t come around because you can’t pull your weight intellectually. There’s a few others like you that constantly try and proclaim the same “ad hom” defense. Like you they pop in from time to time to remind everyone that’s why they don’t come around – like anyone gives a shit. It works out handy for dim wits like you. A card that can be played the second your ass whopping starts. Which is every time you show up and start typing.

    Yep, if it wasn’t for those barbarians and their “a swear words”, I would lay out an argument so all encompassing, powerful and irrefutable that, Marcus Tullius Cicero himself would be embarrassed.

    See ya next time asshole.

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