IPAA’s Newest Chief Roughneck: $50 Oil ‘Not What We Need’
Permian Basin-focused operator Don Sparks told fellow wildcatters, after receiving the IPAA’s lifetime achievement award, that Washington should be helping the U.S. industry assure national security, and that won’t happen at $50 oil.
WILLIAMSBURG, Va.—Permian Basin-focused operator Don Sparks said $50 oil, which is President Trump’s target, is too low.
Sparks addressed fellow Independent Petroleum Association of America (IPAA) members at the IPAA’s annual meeting upon being inducted as the 96-year-old organization’s Chief Roughneck, the organization’s highest award honoring industry veterans.
Oil and gas producers “go out there every day and put their bodies and their time and energy in making sure the industry … still survives and gets by on whatever oil price we end up getting,” Sparks said.
“And $50 oil is not what we need.”
Sparks co-founded privately held Discovery Operating Inc. in 1973, currently producing some 15,000 bbl/d and 35 MMcf/d from some 420 wells.
He said, “I have used every bit of influence—it may not be very much—to let people in Washington understand [oil] is a world commodity.”
The White House and Capitol Hill should be helping the U.S. industry survive “and take care of what’s necessary for us and our national security,” he said.
“$50 oil is not what it takes.”
Drew Martin, co-founder and CEO of privately held, Michigan-based producer Miller Energy Co. noted in a panel discussion that oil producers are price-takers. The oil’s sold into the pipeline at whatever the spot price is at that minute.
“We can get out there. We can lobby. We can hedge. We can work hard with some of the financial instruments that are out there,” Martin told fellow IPAA members.
Cye Cooper Wagner, executive vice president of exploration, Cooper Oil & Gas. (Source: Hart Energy Staff)
“But at the end of the day, if I make an investment at $60 oil and for whatever reason oil goes to $40, that's a challenging thing to go through.
“And we've gone through it.”
Cye Cooper Wagner, executive vice president of exploration for private operator Cooper Oil & Gas, said the family held 100% interest in its first horizontal well.
“And we were so proud of that because it was a really big deal,” Wagner said. The hope was “this could really catapult us.”
D&C for the well went very well and the excitement continued, she said.
“And the night that we finished the completion—the last stage of the frac—the price of oil fell $20,” she said.
“I don't know that [the well’s] still paid out to date, folks.”
And in the oil industry, that story of oil price turmoil is “not unique,” she added.
Meanwhile, former U.S. Sen. Joe Manchin, who represented Marcellus gas producer West Virginia, told Hart Energy at the IPAA meeting that the opposite side of the price pendulum is not exactly great either.
A $90 oil price and $9 natural gas would be too high, he said.
“Staying in the $80s and $90s … is going to put a lot of pressure on people who need this energy affordably.”
Meanwhile, natural gas should be between $3 and $4, he said.
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