Harold Hamm: Activity will slow as oil price slides

Harold Hamm: Activity will slow as oil price slides

BRADLEY OLSON

OKLAHOMA CITY, Oklahoma (Bloomberg) -- Billionaire wildcatter Harold Hamm, a founding father of the U.S. shale boom, said U.S. drilling will slow because of lower oil prices.

While the chairman and CEO of Continental Resources Inc. sees U.S. activity decreasing, he said a potential price war bodes well for U.S. producers that can outlast many countries that depend on far higher oil.

“Will this industry slow down? Certainly,” Hamm said Dec. 1 in a telephone interview. “Nobody’s going to go out there and drill areas, exploration areas and other areas, at a loss. They’ll pull back and won’t drill it until the price recovers. That’s the way it ought to be.”

Hamm declined to say whether falling crude prices have changed Oklahoma City-based Continental’s plans.

Hamm, who helped discover the potential of North Dakota’s Bakken formation, predicted a swift recovery in oil prices, which have fallen more than 36% since June to the lowest level in five years as OPEC refused to reduce production in the face of booming U.S. output.

The decline has come about more because of “rhetoric” from Saudi Arabia than fundamentals of supply and demand in the market, Hamm said. While prices are low, shale producers have the upper hand, he said.

‘People Starving’

“We can adjust quickly and do it down the road,” he said. “It’s a lot easier to adjust companies than it is for countries to adjust. When you’ve got people starving or social policies within countries that people are used to, it’s hard to adjust those.”

Among those countries, he highlighted Russia, Venezuela and some African nations as those that need higher prices to power their economies.

Continental declined 1.7% to $40.27 at 3:42 p.m. in New York after falling 20% on Nov. 28. An index of oil and gas producers on the Standard & Poor’s 500 Index has fallen 28% since June 20, when U.S. crude closed at a 2014 high of $107.26/bbl.