U.S. Fracking Now Competitive With Saudi Oil Prices

July 28, 2016 | http://www.nasdaq.com/article/us-fracking-now-competitive-with-saudi-oil-prices-cm656856
By Ryan McQueeney

U.S. fracking operations are now efficient enough to produce oil at a price that's competitive with traditional drilling in Saudi Arabia-at least for Pioneer Natural Resources, whose CEO confirmed that production costs have fallen to $2.25 a barrel in some locations.
Scott Sheffield, Pioneer's soon-to-be retired chief executive, said in the company's earnings call Thursday that improved techniques at horizontal wells in the Permian Basin of West Texas have brought costs low enough to match that of Saudi Arabia, which attempted to sabotage U.S. operations by flooding the market with low-priced oil starting in 2014.
Pioneer reported its second-quarter earnings results this morning, posting a loss of 22 cents per share on revenues of $786 million. The Zacks Consensus Estimate called for a loss of 34 cents per share, while our revenue estimate was $794 million.
While Pioneer's earnings beat and newly-competitive pricing imply that it is possible for U.S. oil companies to survive the market conditions caused by Saudi Arabia and other oil giants in the Middle East, Sheffield didn't seem to have much faith in any production outside the Permian Basin.
"My firm belief is the Permian is going to be the only driver of long-term oil growth in this country. And it's going to grow on up to about 5 million barrels a day from 2 million barrels," Sheffield said.http://www.nasdaq.com/article/us-fracking-now-competitive-with-saudi-oil-prices-cm656856