Exxon's Tillerson: Price Drop Will 'Sort Out' Shale Oil Sector
LONDON, Dec 3 (Reuters) - The sharp decline in crude oil prices will lead to a "sorting out" of the shale oil sector, Rex Tillerson, Exxon Mobil's CEO, said on Wednesday in a television interview.
"A lot of people have entered this space -- there will be some sorting out," he told CNBC, when asked if the lower oil price could put pressure on smaller unconventional players in the United States.
Tillerson said he was comfortable with Exxon's exposure to the sector.
"We are a big investor in shale in the United States, and we have been expanding our title in the space."
The slump in the price of crude oil, which has seen Brent fall around 38 percent since June, has prompted concern that some shale oil production will become unprofitable, and may lead to problems for some players in the sector.
He said that the reason for the price fall was due to the fundamentals of growing supply and limited demand growth.
"If you take a 1.6 million barrel per day supply growth and put it on top of a 1 million bpd demand growth, you've got a surplus of capacity," he said.
"You fill storage up, you fill inventories up, at some point it's got to show up in prices."
Tillerson said that he was confident with the company's ability to withstand the price drop.
"All the investment decisions we take have been tested across a range of pricing that accommodates these kinds of price swings," he said. "You ensure that you can invest and be successful at the bottom of the cycle."
"We test across a range that's all the way down to $40, and up to $120."
(Reporting by Simon Falush, editing by Louise Heavens)
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