Oil wells in the biggest U.S. oil field remain profitable even when crude prices drop below $30 a barrel, said Pioneer Natural Resources Co. Chairman and Chief Executive Officer Scott Sheffield.
The so-called break-even price for drilling in the Permian Basin in Texas is “sub-$30” a barrel, Sheffield said during a Bloomberg Television interview on Friday. For shale drillers such as Irving, Texas-based Pioneer, “break-even” typically means operating costs plus a 10 percent or 15 percent return.
Pioneer closed a $435 million acquisition of drilling rights across 28,000 acres in the Permian region from Devon Energy Corp. earlier this week. When the transaction was announced in June, Pioneer said wells drilled in the acquired assets will generate returns of 50 percent or more.
West Texas Intermediate crude rose 1 percent to $43.58 a barrel at 8:10 a.m. on the New York Mercantile Exchange. The price has climbed 67 percent since touching a 12-year low of $26.05 on Feb. 11.