What Oil Price Do Cos Need to Profitably Drill in USA?

The West Texas Intermediate (WTI) oil price companies need to profitably drill a new well in the U.S. is increasing, according to the Dallas Fed Energy Survey.

In the organization’s first quarter 2022 report, it was revealed that firms needed $56 per barrel on average to profitably drill in the country. Across regions, average breakeven prices to profitably drill a new well ranged from $48 per barrel to $69 per barrel, with breakeven prices in the Permian Basin averaging $52 per barrel. Eagle Ford drilling was shown to have the lowest breakeven price at $48 per barrel, and ‘other U.S. shale’ had the highest at $69 per barrel.

Going back to the first quarter 2021 Dallas Fed Energy Survey, it was found that companies needed $52 per barrel on average to profitably drill in the United States. Across regions, average breakeven prices to profitably drill a new well ranged from $46 to $58 per barrel, with breakeven prices in the Permian Basin averaging $50 per barrel. Permian Midland and Eagle Ford had the joint lowest breakeven drill price in this survey at $46 per barrel. Other U.S. shale was again the highest at $58 per barrel.

In the first quarter 2020 Dallas Fed Energy Survey, it was revealed that firms needed $49 per barrel on average to profitably drill. Across regions, the average breakeven prices to profitably drill a new well ranged from $46 to $52 per barrel, with breakeven prices in the Permian Basin averaging $49 per barrel. Permian Midland and Eagle Ford again had the joint lowest breakeven drill price at $46 per barrel. Permian Delaware had the highest breakeven cost at $52 per barrel.

In the latest survey, executives from 83 exploration and production firms answered the question on what WTI oil price their firm needed to profitably drill a new well. Executives from 92 exploration and production firms answered the question in the 2021 and 2020 first quarter surveys.

The Dallas Fed conducts the Dallas Fed Energy Survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District, the survey highlights.

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