Oil prices fall below bottom line, U.S. shale oil producers face not making a penny

BEIJING, Oct 10 (Xinhua) — U.S. shale oil producers are facing a harsh reality as a price war between Saudi Arabia and Russia has plunged international oil prices: almost all U.S. shale oil drilling is unprofitable. According to data collected by Rystad Energy, a Norwegian energy consultancy, only five companies in the two largest shale oil-producing regions in the United States have break-even costs lower than current oil prices.

Oil prices fall below bottom line, U.S. shale oil producers face not making a penny

U.S. crude futures fell 24.6 percent to $31.13 a barrel on Monday, having fallen 33 percent to $27.34. Companies such as Exxon Mobil, Western Petroleum, Chevron and Crownquest are still profitable from shale drilling in the U.S. Basin when oil prices fall to $31, according to Rystad. Western Oil’s drilling in Colorado’s DJ Basin could also be profitable.

For more than 100 other companies in the industry, this is not the case. For them, drilling new wells will almost certainly mean a loss.

Producers, including Diamondback Energy and Parsley Energy, have said they are cutting drilling budgets and putting down rigs. Other companies, such as Apache and Western Petroleum, said they would control drilling.

The shale boom has made the United States the world’s largest producer of crude oil and a net exporter in recent months. But if oil prices stay at $30 a barrel, shale oil producers will be forced to cut so much drilling that U.S. crude oil production could fall by about 20 million barrels a day from the end of the year to the end of next year, according to Rystad.