UPDATE 1-Devon ready to boost drilling, spending if oil prices keep climbing

Wed May 4, 2016 1:00pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

(Adds context on other producers' plans, details on hedging and Canada operations amid wildfires, stock price)

HOUSTON May 4 (Reuters) - Devon Energy Corp will ramp up drilling and spending if oil prices continue to recover, executives said on Wednesday, joining a growing list of companies expecting an increase in activity as the commodity price picture improves.

The Oklahoma City-based oil and gas driller could start adding incremental drilling activity if oil prices hit $50 a barrel and could double capital spending if they reach $60, Chief Executive Officer Dave Hager told investors on a conference call to discuss first-quarter results.

It would "probably take $60 oil or more to really get back to a capital spend level of close to $2 billion versus a $1 billion, where we're at now," Hager said.

His comments come after rival producers Pioneer Natural Resources Co and Whiting Petroleum Corp said they could see a ramp-up of drilling and fracking, contributing to a growing consensus that a price rise above $50 could fuel a resurgence in the U.S. shale industry.

U.S. oil prices have rebounded since hitting a trough just above $26 per barrel in February, and traded above $43 on Wednesday.

Devon shares slid 7 percent to $30.47.

Devon had said it expected its 2016 oil output to exceed expectations by as much as 3 percent, even without additional capital spending.

The company has also taken advantage of the recent price spike to hedge 25 percent of its expected 2016 oil output, using a "collar" strategy to guarantee a price floor of $39 a barrel and see benefits from spikes above $44 a barrel.   Continued...