Pioneer Natural Resources CEO sees Saudi Arabia moving to boost oil prices

Pioneer Natural Resources CEO says the company can be profitable even at $45/barrel oil. Photo by Joe Baker.

Pioneer Natural Resources CEO: “We’re not going to not drill”

Tim Dove, CEO of Pioneer Natural Resources predicted on Tuesday that Saudi Arabia will make a move to boost oil prices in order to prop up the kingdom’s own finances.

The recent downturn in oil prices occurred despite OPEC’s moves to reduce production by 1.8 million barrels per day. Most OPEC members along with some non-member states, including Russia, agreed to the cuts last November. The pact was to expire this month, but in May, participants agreed to extend the agreement into March 2018.

Since then, oil prices have tumbled.

“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,” Dove said at the JPMorgan Energy Equity Investor Conference in New York.

According to Dove, Pioneer has no plans to stop drilling new wells. The company is one of the largest oil producers in the Permian Basin.

“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,” Dove told Reuters.

Pioneer has hedged most of its 2017 oil production, but Dove said the company is not about to hedge more than roughly one-third of its 2018 output since OPEC’s meeting in May.

“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.”