On Wednesday a representative from Occidental Petroleum Corp. told Dunn County commissioners that the company probably won’t be actively drilling or fracking in the area until March, according to a report from The Dickinson Press.
In an earnings call last month, Occidental CEO Steve Chazen announced that the company “virtually eliminated” capital spending in North Dakota and in some international oil sands. The company reported that this was due to “unacceptable returns in the current price environment.”
The Dickinson Press reports that for several months, an Occidental spokesman had been reporting to the county commission about where the company’s six rigs operating in Dunn County would be moving. Currently the company has one rig completing a well in the county. Afterwards it will be taken out of use within 10 days. The final session of hydraulic fracturing was completed Tuesday night and the equipment will be moved offsite within a week.
Occidental representative Del Oliver said, “They’re [going to] sit for a while. It’s all predicated on the price of oil.” The company is a major player in Dunn County and throughout the oil patch, but through March, it will focus on producing oil from existing wells rather than drilling new ones. Despite the increase in oil prices seen earlier this week, he said the market climate remains foggy, and it is unclear when prices will maintain a reasonable level.
Since December the rig count in North Dakota has dropped substantially due to the drop in oil prices. As of today, the rig count sits at 136, down by around 50 since December of last year. The price of oil dropped by almost half since the summer. The counties located in the core of the Bakken formation (Dunn, Williams, McKenzie and Mountrail) were at first resistant to the price decline due to lower breakeven prices, but Occidental’s exit from Dunn County indicates that even the core counties aren’t immune to low prices.