When Harold Hamm speaks, those in the oil and gas industry listen and they listen carefully.
The founder and President of Oklahoma City’s Continental Resources had some advice Wednesday at the Hart Energy DUG conference in Oklahoma City on how to survive in the oil and gas downturn.
“You have to have a great deal of discipline. It has to be done,” he told the crowd of several hundred. “We also have to balance the market.”
Financial discipline is what he’s talking about. From the drilling cost per well to completions and transportation. It’s what most energy company CEOs have talked about in their recently-released third quarter earnings reports.
And if that means fewer rigs, so be it. Hamm predicted the U.S. rig count, now at 784 could drop to as low as 750.
“It seems simple but it’s also somewhat painful,” he said in an interview on stage.
But he also sees an upside in the market even as most Energy and Production companies are down about the same amount, anywhere from 40% to 50%.
Hamm says private equity investors in part led to the overproduction that has led to low oil prices.
“There are 31 public companies today in our sector while there are 500 private equity firms,” he said. “It brought on a tremendous amount of production and the early people did well—very successful.”
But Hamm says a lot of other people, including those on Wall Street were “burned” by what he called “capital destruction.”
While Democratic Presidential candidates are calling for an end to fossil fuel, the question is raised—is there a war on U.S. energy?
“Watch the debate tonight,” he responded, referring to the latest Democratic Presidential candidates’ debate. “Absolutely.”
“An end to fossil fuels? Really?” he asked skeptically. “I think we have a great future and fossil fuels will be with us for the next 50 years.”
