In Texas and Oklahoma, oil companies can wring money out of newly drilled wells in major basins for less than $50 a barrel, a new Dallas Fed survey says.
As producers cut down on drilling time and pump greater quantities of crude, break-even costs in active U.S. oil fields have dropped 6 percent over the past year, the Federal Reserve Bank of Dallas said on Wednesday.
“It’s no surprise that these regions continue to attract new rigs and capital week after week,” said Michael Plante, senior economist at the Dallas Fed. In the Permian Basin, break-even costs have dropped to an average $46 a barrel, the lowest of the major basins.
The Dallas Fed, which surveyed more than 150 oil producers and service companies this month, said seven in 10 oil field service companies believe business will improve over the next six months. Five in 10 oil producers said the same, and many have said they expect to raise spending levels next year. U.S. oil prices, they believe, may rise to $53.49 a barrel by the end of the year.
The Dallas Fed more than a third of companies said they raised oil production in the first quarter, while 45 percent said they maintained output. Nearly 40 percent of service companies said they saw an increase in the use of their oil field service equipment.