Lee Boothby, CEO of Newfield Exploration Co., thinks that oil prices need to be higher for production levels to increase significantly.
“People that are following the play, the investors, are going to have to be a little bit patient,” Boothby told Bloomberg on Oct. 13. “It’s such a huge and valuable resource, you want to get it right.”
This “valuable resource” of which Boothby speaks is the “multi-billion barrel” oil resource that is part of the $470 million investment Newfield has made this year in the Scoop and Stack region in Oklahoma. The firm already has five wells operating in the area and could potentially double that number, but caution seems to be the new modus operandi for the company during these times. Until the oil price starts to make a consistent upward movement, resource-bountiful regions will remain relatively undeveloped.
Even in the Scoop and Stack area, where it is actually profitable to produce oil at these lower prices, Boothby is doubtful that any real increase in oil production will happen with the oil price at $50.
“You’ll see an acceleration of drilling as people’s cash flow grows in response to higher prices; we know we can go faster,” Boothby said. “But we don’t feel in a 50-ish environment that that makes sense.”
Because cash has been tight for companies operating in the energy industry, the Texas-based firm has considered selling off assets in the Bakken Shale region in order to finance development in the Scoop and Stack shale region of Oklahoma. Boothby calls the sale of assets a matter of “when, not if,” according to Bloomberg.