Permian Producer Says 20% Texas Output Cut Might Not Be Enough

(Bloomberg) -- Parsley Energy Inc., one of two shale drillers pushing Texas to coordinate a statewide cut among all producers, said the 20% curtailment they’ve proposed may not be enough to buoy oil prices.

Chief Executive Officer Matt Gallagher said Tuesday in a Bloomberg TV interview he’s willing to reduce his own company’s oil output by 20% if others agree to the same deal and has already started shutting in about 400 “lower-producing wells.” But America’s biggest oil-producing state can’t be the only one curbing supply to solve a global problem of low crude prices, he said.

“Canada, Norway, Mexico, Brazil and of course the Big Kahuna, OPEC+, need to come to an agreement,” Gallagher said. Absent a globally coordinated cut, “the service sector would be absolutely crushed and devastated,” leaving American oilfield jobs to move abroad, he said.

Oil explorers large and small from around the world are grappling with a plunge in crude prices brought on by a global pandemic and a battle for market share between Russia and Saudi Arabia. Exxon Mobil Corp. announced Tuesday a 30% spending cut, the second-biggest in its modern history, while closely held Texland Petroleum LP has already begun reducing its own output in the Lone Star State. Saudi Arabia and Russia are closing in on an agreement to curb output, according to delegates involved in the talks.

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