Latest news with #Stice
Yahoo
07-05-2025
- Business
- Yahoo
A top CEO declared the U.S. oil industry has ‘peaked'
A record-breaking but maturing U.S. oil industry has 'peaked' and already begun its decline as it struggles under the weight of tariffs and lower oil prices, the CEO of the Permian Basin's top pure-play producer said. Crude oil prices have fallen this week to new four-year lows since the pandemic amid recession fears and unexpected production hikes from OPEC nations and their allies. As a global slowdown spreads throughout every industry, U.S. oil producers are quickly pivoting to drop drilling rigs and cut costs with prices now below the levels for profitability, including key Texas Permian producers Diamondback Energy and Coterra Energy, both of which held their earnings calls May 6. 'We believe we are at a tipping point for U.S. oil production at current commodity prices,' Diamondback chairman and CEO Travis Stice said in a needle-moving shareholder letter prior to the call. 'As a result of these activity cuts, it is likely that U.S. onshore oil production has peaked and will begin to decline this quarter. 'This will have a meaningful impact on our industry and our country,' Stice added. As the global economy goes, so to does oil demand. Diamondback, the largest oil producer focused only on the Permian, has grown into a key bellwether for the industry. Stice's warning was, in effect, a wake-up call to anyone in the industry yet to heed what was already underway. The company said it will reduce its drilling rig count by three and cut one of its well completions, or fracking, crews. Diamondback lowered its 2025 midpoint capital expenditure guidance by $400 million down to $3.6 billion, although oil volumes are only expected to fall by 1% because of efficiency gains. Steel tariffs have increased downhole well costs by more than 10% and contribute to the declining activity levels, Stice said. 'We're a little over 100 days into this new administration and, 'Good Lord.'' Coterra chairman and CEO Tom Jorden said it is likely 'tied together' as certain OPEC nations led by Saudi Arabia, and their allies announced a second straight unexpected hike in their production quotas on May 3—at a time when President Trump wants lower oil prices to push gasoline costs down. 'We're a little over 100 days into this new administration and, 'Good Lord,'' Jorden said in the May 6 earnings call. 'There's been a tremendous amount of volatility introduced, whether we're talking about the oil markets or tariffs and our relations around the world. All of these converge on forecasts for oil price. The president is trying to do a lot of difficult things up front, and the White House is in a hurry. We have some sympathy for that sense of urgency.'
Business Insider
07-05-2025
- Business
- Business Insider
A top exec says America's oil industry is at a 'tipping point' and US production is set to drop
America's oil boom is at a crosrroads, according to a top industry executive. The CEO of Diamondback Energy warned that tumbling oil prices will depress US crude output, predicting that American onshore production has peaked. Prices hit a four-year low on Monday, with WTI crude trading below $60 a barrel since the start of May. "On an inflation-adjusted basis, there have only been two quarters since 2004 where front month oil prices have been as cheap as they are today (excluding 2020 which was impacted by the global pandemic)," Travis D. Stice wrote in a letter to shareholders. "Therefore, we believe we are at a tipping point for U.S. oil production at current commodity prices." Industry observers have warned that tumbling prices pose a risk to the sector, as businesses will be reluctant to pump more oil at low profit margins. The Diamondback CEO's letter is another strike against President Donald Trump's " drill, baby, drill agenda." In a survey from the Dallas Fed last month, oil and gas executives bashed the administration's push to increase US production, describing Trump's agenda as " nothing short of a myth." Stice noted that the US has produced more oil and gas than Russia and Saudi Arabia combined, the world's second and third largest producers. But if Stice is right, the trend of record-setting US oil production may be reaching its end. Tariffs are denting growth outlooks, implying that global oil demand will be low. Meanwhile, OPEC+ is positioning to boost output, putting fresh downward pressure on prices. By the end of the second quarter, Stice expects the US oil rig count to drop 10%. Permian Basin crew counts are already down around 20%, he wrote. Diamondback is responding by lowering activity to cut down on capital expenditures, drilling, and well completion. "Put simply, we would prefer to use the incremental dollar generated to repurchase shares and pay down debt over drilling and completing wells at these prices today," Stice wrote. The company reduced its full year budget by $400 million at the midpoint. It might ramp up activity if oil prices return above $65 per barrel consistently.
NBC News
06-05-2025
- Business
- NBC News
U.S. oil production has likely peaked and will start to decline due to price plunge, Diamondback CEO warns
U.S. onshore oil production has likely peaked and will start to decline due to the recent plunge in crude prices, jeopardizing the nation's position as the world's largest fossil fuel producer and its energy security, the CEO of Diamondback Energy told shareholders in a letter this week U.S. crude oil prices have tumbled about 17% this year as recession fears due to President Donald Trump's tariffs weigh on demand expectations. At the same time, OPEC+ producers led by Saudi Arabia are rapidly increasing supply to the market. Adjusted for inflation, there have only been two quarters since 2004 when front-month oil prices have been as cheap as they are now, excluding 2020 when the Covid-19 pandemic swept the world, Diamondback CEO Travis Stice wrote. 'Therefore, we believe we are at a tipping point for U.S. oil production at current commodity prices,' Stice warned the company's shareholders in a letter published Monday. 'It is likely that U.S. onshore oil production has peaked and will begin to decline this quarter,' Stice told investors in his letter, pointing to cuts in activity levels. Diamondback is an independent oil and gas producer focused on the Permian Basin, the most prolific oil patch in the U.S. The company is the third biggest oil producer in the Permian and the sixth biggest in the continental U.S., according to data from Enverus. U.S. crude oil prices rose more than 4% to $59.56 per barrel Tuesday as domestic production is expected to decline. Energy security at risk The shale revolution over the past 15 years has transformed the U.S. into the largest fossil fuel producer in the world, with the country producing more oil and gas than Saudi Arabia and Russia combined, the CEO said. 'This has transformed our economy and given the United States a level of energy security not thought possible at the beginning of this century,' Stice told investors. 'Today's prices, volatility and macroeconomic uncertainty have put this progress in jeopardy,' the CEO warned. Depending on how much oil prices fall, the amount of capital needed for the U.S. to produce 13 million barrels per day and for the Permian to produce 6 million bpd 'might be an untenable lift for the business model that we put in place, where we're returning so much back to our investors who own the company,' Stice told analysts on Diamondback's earnings call Tuesday morning. 'We don't have a crystal ball in the rest of the world, but we have a very good view of what the U.S looks like, and right now, that's a business that's slowing dramatically and likely declining in terms of production,' Stice said. Onshore production to decline The number of crews fracking shale for oil and gas has already fallen 15% this year with crews in the Permian Basin down 20% from a peak in January, Stice estimated, warning that number of crews will likely decline further. Rigs focused on oil production are expected to decline nearly 10% by the end of the second quarter and fall further in the third, the CEO said. Diamondback has cut its capital budget by about $400 million to $3.4 billion to $3.8 billion this year. Trump's steel tariffs are the biggest cost headwind the oil producer is currently fighting, Stice said. Those tariffs have increased well costs by about 1% or $40 million annually, the CEO said. Efficiency gains are expected to offset rising costs as activity slows in the coming quarters, he said. Diamondback has dropped three rigs and one completion crew, and the company expects to remain at these levels through the majority of the third quarter, the CEO said in his letter. It now expects to drill between 385 to 435 wells this year and complete 475 to 550 wells. 'To use a driving analogy, we are taking our foot off the accelerator as we approach a red light,' Stice said. 'If the light turns green before we get to the stoplight, we will hit the gas again, but we are also prepared to brake if needed.'
CNBC
06-05-2025
- Business
- CNBC
U.S. oil production has likely peaked and will start to decline due to price plunge, Diamondback CEO warns
A pump jack operates near a gas turbine power plant in the Permian Basin oil field outside of Odessa, Texas, U.S. February 18, 2025. U.S. onshore oil production has likely peaked and will start to decline due to the recent plunge in crude prices, jeopardizing the nation's position as the world's largest fossil fuel producer and its energy security, the CEO of Diamondback Energy told shareholders in a letter this week U.S. crude oil prices have tumbled about 17% this year as recession fears due to President Donald Trump's tariffs weigh on demand expectations. At the same time, OPEC+ producers led by Saudi Arabia are rapidly increasing supply to the market. Adjusted for inflation, there have only been two quarters since 2004 when front-month oil prices have been as cheap as they are now, excluding 2020 when the Covid-19 pandemic swept the world, Diamondback CEO Travis Stice wrote. Diamondback is an independent oil and gas producer focused on the Permian Basin, the most prolific oil patch in the U.S. "Therefore, we believe we are at a tipping point for U.S. oil production at current commodity prices," Stice warned the company's shareholders in a letter published Monday. U.S. crude oil prices rose more than 4% to $59.56 per barrel Tuesday as domestic production is expected to decline. The shale revolution over the past 15 years has transformed the U.S. into the largest fossil fuel producer in the world, with the country producing more oil and gas than Saudi Arabia and Russia combined, the CEO said. "This has transformed our economy and given the United States a level of energy security not thought possible at the beginning of this century," Stice told investors. "Today's prices, volatility and macroeconomic uncertainty have put this progress in jeopardy," the CEO warned. Depending on how much oil prices fall, the amount of capital needed for the U.S. to produce 13 million barrels per day and for the Permian to produce 6 million bpd "might be an untenable lift for the business model that we put in place, where we're returning so much back to our investors who own the company," Stice told analysts on Diamondback's earnings call Tuesday morning. "We don't have a crystal ball in the rest of the world, but we have a very good view of what the U.S looks like, and right now, that's a business that's slowing dramatically and likely declining in terms of production," Stice said. The number of crews fracking shale for oil and gas has already fallen 15% this year with crews in the Permian Basin down 20% from a peak in January, Stice estimated, warning that number of crews will likely decline further. Rigs focused on oil production are expected to decline nearly 10% by the end of the second quarter and fall further in the third, the CEO said. "As a result of these activity cuts, it is likely that U.S. onshore oil production has peaked and will begin to decline this quarter," Stice told investors in his letter. Diamondback has cut its capital budget by about $400 million to $3.4 billion to $3.8 billion this year. Trump's steel tariffs are the biggest cost headwind the oil producer is currently fighting, Stice said. Those tariffs have increased well costs by about 1% or $40 million annually, the CEO said. Efficiency gains are expected to offset rising costs as activity slows in the coming quarters, he said. Diamondback has dropped three rigs and one completion crew, and the company expects to remain at these levels through the majority of the third quarter, the CEO said in his letter. It now expects to drill between 385 to 435 wells this year and complete 475 to 550 wells. "To use a driving analogy, we are taking our foot off the accelerator as we approach a red light," Stice said. "If the light turns green before we get to the stoplight, we will hit the gas again, but we are also prepared to brake if needed."
Yahoo
06-05-2025
- Business
- Yahoo
'This oil price doesn't work': Diamondback says US shale production has peaked
The head of the largest independent oil producer in the Permian Basin predicts US shale production has peaked and will likely decline from here as oil prices hovers near four-year lows. 'We have a very good view of what the US looks like. And right now that's a business that's slowing dramatically and likely declining in terms of production,' Diamondback Energy (FANG) CEO Travis Stice said during the company's earnings call on Tuesday morning. Stice, who is slated to step down and become executive chairman later this month, issued a shareholder letter on Monday in which he pointed to declining crew count activity in the Permian Basin as an indicator that "production has peaked" and will begin to decline this quarter. 'We know a lot of people in the business,' Stice told analysts. 'Every single conversation I've had is that this oil price doesn't work.' Industry insiders have highlighted that the rising cost of drilling is causing production to plateau after reaching an all-time high in 2024. Weekly rig counts have also been trending lower compared to a year ago, according to Baker Hughes data. On Tuesday oil prices rebounded after touching their lowest point in four years in the prior session. West Texas Intermediate (CL=F) futures rallied over 3% to hover just below $60 per barrel. Brent crude (BZ=F), the international benchmark, also rebounded to trade near $63 per barrel. In April, prices saw their worst monthly drop since November 2021 over demand fears stemming from a global trade war and a decision to increase output from the Organization of Petroleum Exporting Countries and its allies. Wall Street analysts have signaled oil will have to go much lower in order for the Trump administration to rescue the industry, given its main priority: lower energy costs. "While the recent de-escalation in trade talks has reduced the probability of a bear case, the 'Trump put' does not extend to energy, as the administration continues to prioritize lower oil prices to manage inflation," JPMorgan analysts wrote in a note last week. Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre. Click here for in-depth analysis of the latest stock market news and events moving stock prices Read the latest financial and business news from Yahoo Finance
