(Reuters) - Saudi Arabia likely will move to boost oil prices after a recent drop in order to prop its own national finances, the chief executive of U.S. shale oil producer Pioneer Natural Resources Co said on Tuesday.
Oil prices have tumbled in recent weeks despite moves by Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries last month to quell a global supply glut brought on in part by resurgent U.S. shale output.
“I personally believe (the oil price) where we are right now is not sustainable. It comes in the form of two words: Saudi Arabia. They cannot have a scenario, which is $43 or $44 (per barrel) oil, and sustain their national budgets,” Tim Dove, Pioneer’s CEO, said at the JPMorgan Energy Equity Investor Conference in New York.
Despite the supply glut, Pioneer has no plans to stop drilling new wells, Dove said.
“We’re not going to not drill, because this very well may be the time where the well costs are as low as they’re ever going to be,” he said.
Pioneer, one of the largest oil producers in the Permian Basin of West Texas and New Mexico, has hedged most of its 2017 oil production but has not been about to hedge more than roughly a third of is 2018 output since OPEC’s meeting last month, Dove said.
“We can pare away and still be profitable even in a $45 (per barrel) environment,” he said. “We may just dial back at the margin in that scenario and not be a significant over-spender.”
Reporting by Ernest Scheyder; Editing by Chizu Nomiyama