OPEC+ supply cut should encourage oil exploration, shale chief says
(Bloomberg) — OPEC+’s decision to lower its oil-production cap may set the stage for higher prices that would enable U.S. explorers to expand drilling, according to shale entrepreneur Matt Gallagher.
Gallagher, who has led closely held shale driller Greenlake Energy Ventures LLC since engineering last year’s $6.4 billion sale of Parsley Energy Inc. to Pioneer Natural Resources Co., said the OPEC+ move on Wednesday gives oil CEOs more clarity on what oil-price levels the alliance is determined to defend.
“We now know where the price floor is for OPEC and that should give traders comfort in the back end of the curve,” Gallagher said in a telephone interview. “That can sanction more projects for sure.”
Shale executives have dramatically dialed back their oil-price expectations over the past three months as recession risks weighed on the market. US oil prices, which averaged about $85 a barrel during the third quarter are expected to end the year below $100, according to the Federal Reserve Bank of Dallas survey that pre-dated Wednesday’s OPEC+ measure.