U.S. and Canadian Oil Drillers See Costs Peaking in Fields

Drilling companies operating in shale fields that go from Texas’ Eagle Ford to Canada’s Duvernay have recently reported a decrease in their expenses. This reduction in costs has previously hindered their earnings and output.

“Everything we can see looks stable,” said Enerplus Corp. CEO Ian Dundas referring to oil field costs. According to Dundas, falling steel prices could be moving in a slightly downward direction. Calgary-based Enerplus is active in US Bakken and Marcellus shale formations.

During an interview at the Bank of Montreal and the Canadian Association of Petroleum Producers’ conference in Toronto, Dundas expressed his opinion, with other industry leaders in agreement.

Producers in North America, including in the Permian Basin, have been choosing to focus on investor returns more than increasing production. Price hikes for materials like steel pipes and frack pumps have been a contributing factor to the decrease in production. With the current cost situation improving, it is possible for oil companies to consider boosting output, even while OPEC+ suppliers remain tight with their supplies.

According to Dundas, the recent decline in drilling activity suggests that prices will be rather stable going forward.

“With the gas rig count finally starting to come off a little bit and oil activity not changing very much, I would think we’re going to be in a relatively stable year,” said Dundas.

Although the reduction of drilling rigs has caused costs to decline in other regions of the world, CEO of Baytex Energy Corp. Eric Greager estimated that prices will stay steady or climb slightly in places that need a great lot of fracking. The company runs operations in the Eagle Ford shale in Texas, and in the Duvernay, Peace River, Viking, and Lloydminster areas in Canada.

“Within the Duvernay and the Eagle Ford, we’re benefiting from availability of equipment, and that’s a feature that may last or it may not last, but right now we’re taking advantage of the flow of available resources,” said Greager during a panel discussion at the conference.