Dave Lesar, CEO of Halliburton, has jumped on the bandwagon with other oil executives who claim they aren’t worried about the decrease in oil prices and actually expect them to increase next year.
According to Lesar, demand is slowly increasing, and the decrease in price is mostly due to an oversupply. As reported by Bloomberg, Lesar also mentioned that it will “prove self-correcting, especially when it comes to U.S. shale production.”
Compared to conventional oil, shale wells die out quickly which requires companies to constantly depend on new drilling to maintain production. This also means that shale is more responsive to price adjustments. Lesar explained how lower oil price will discourage operators from new drilling, which will remove the glut in crude supplies.
While Halliburton is the world’s largest supplier of fracking services, perhaps the company has the best perspective on just what is powering the shale boom in the U.S.
During an interview at Halliburton’s headquarters in Houston Texas, Lesar also mentioned the supply-demand inequality is only temporary. Price will more than likely remain between $80 and $100 per barrel.
Yet, the decreasing oil prices may be harmful to Halliburton. Because oil operators aren’t making as much profit, they won’t be investing in the equipment and hydraulic fracturing services that Halliburton supplies.
To read more about Halliburton and lower oil prices, click here.