Oil companies slow spending at rapid pace

Crude production, though, unlikely to slow and will keep prices low

By Chris Tomlinson | January 2, 2015

Oil company executives are finally heeding the advice T. Boone Pickens gave back in October: Stop drilling.

The rig count is dropping at a precipitous pace, capital budgets are a fraction of last year's and debt-laden companies are selling assets to those with fat balance sheets. Smart management teams are no longer talking about crude prices recovering anytime soon. In fact, the evidence points to potentially lower prices for both oil and natural gas.

The problem is that there are too many wells producing too much oil and natural gas, and cutting the number of rigs drilling new wells will do nothing to cut that supply. This month's report from the U.S. Energy Information Administration shows that production in the Marcellus shale region continued to rise long after companies stopped drilling new wells.

Full Story at Houston Chronicle

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