WASHINGTON, January 15 (Sputnik) – Falling world oil prices might have a significant impact on US smaller oil companies, however, the work of US energy major ConocoPhillips will not be much affected, company’s Chairman and CEO claimed at a briefing at the Center for Strategic and International Studies (CSIS) in Washington on Wednesday.
“I think some of the smaller companies that went out and borrowed a lot of money, spending above their means, there is going to be a real stress on the business,” Ryan Lance said. “There will be winners and losers out of this. That has happened before and it will happen out of this cycle as well.”
“We look at it every day. There probably will be opportunities to come out of it, but it has to compete in your portfolio,” he said.
“Rate of growth and amount of oil production are probably not going to be heavily influenced by the price today because we made investments in the last two to three years that are now coming into production in 2015 and 2016,” Lance underlined.
He added that if oil prices remain low, as companies have less amount of cash to reinvest in business it will impact capital investment and slow growth in production in the future.
“We are capital intensive business. We reinvest 80-90 percent of the money we make back into the business,” Lance explained. “As our cash flow comes down we have less to invest back in the business and that will ultimately impact the rate of growth in production from unconventionals.”
According to the media reports, WBH Energy, US shale and gas producer based in Texas, filed for bankruptcy protection about two weeks ago.
World oil prices have been falling for more than six months due to oversupply in the market. According to a forecast by US investment bank Goldman Sachs, the price of WTI could slide to $39 per barrel over the next six months and the price of Brent may fall to $43 over the same period of time.