Occidental Petroleum Corp. will not increase oil production, with the company’s CEO saying that the recent rise in oil to over $90 a barrel is happening without balance in the market.
In an interview with Bloomberg Television, Occidental CEO Vicki Hollub said, “Only in a market where we see rebalancing would we increase our oil production – and even then it would be at a moderate pace.
Even if oil prices exceed $100 a barrel, Hollub told Bloomberg, they are unlikely to be sustainable long enough to cause demand destruction.
Hollub cited the shale industry’s newfound discipline to hold back on production increases, which at the height of the selling boom led drillers to take advantage of high per-barrel prices in the short term by significantly increasing production, leading to a market oversupply problem.
This time around, shale investors are more interested in higher dividends than production growth, and Ninepoint Energy Fund manager Eric Nuttall sees today’s soaring oil prices as a sign of higher dividends and more buybacks to come from oil companies as high crude prices create more free cash flow.
U.S. shale production decline curves have steepened significantly since 2010 and will continue to steepen, Enverus Intelligence Research (EIR), a subsidiary of Enverus, said in an August report.