While one oil group in Oklahoma wants the Corporation Commission to declare oil a waste and allow the shut-in of more wells, Continental Resources founder Harold Hamm is already shutting down most of his operations.
In a conference call this week following the first quarter earnings report, Hamm told investors Continental is curtailing up to 70% of its wells in May. He said the company responded to the unprecedentedly low prices and immediately began voluntarily curtailing oil production in the Bakken and in Oklahoma.
Hamm supported proposed prorationing in Texas and in Oklahoma where regulators are considering the merits of more well shutins. But in this week’s conference call, he also indicated the industry is responding on its own without mandated reduction orders from regulators.
“As is evident from recent peer earnings reporting and commentary, the US oil and gas industry, coupled with the supply cuts coming out of OPEC, they’re starting to curb production as to not overwhelm storage capacity. We’re also seeing the easing of stay-at-home orders across the globe as economies get back to work, as we have here in Oklahoma, which we believe will lead to increased demand for petroleum products,” said Hamm in his presentation.
“It is important that the US oil and gas industry, as well as other global producers, continue exerting capital discipline to not overproduce and to oversupply the market during these times. Everyone needs to continue to cut back and participate as the slump continues. UAE and Kuwait are examples of this.”
Hamm said economic models indicate 2020 will be even stronger eventually and the nation is already seeing the consequences of the supply and demand rebalance manifest in current and future prices.
“We also know from experience we can quickly bring this deferred production back online once market conditions improve, and we will not see degradation in reservoir performance as wells are brought online,” he added.
“Finally, I’m thankful for President Trump’s leadership in the midst of these volatile market conditions. While it’s unlikely the Saudis will flood the market like this again any time soon, I believe this recent downturn has highlighted to the federal government just how important US shale producers and the preservation of the American Energy Renaissance are to the US economy jobs and to our national security,” concluded Hamm who last month was one of the oil and gas leaders who attended a meeting with President Trump.
Source: Continental Resources