At what point is oil and gas exploration and production profitable?

In the fall of 2014, the break-even price per barrel was anywhere between $59-$82.

Today, most companies are breaking even for about $40 per barrel and some predict that $20 break-even points are possible in the near future.

Reasons for the decline in production costs include:

During the downturn, companies were forced to become more efficient.

Improved technologies account for 10% of savings.

Tax reform will have an impact on profitability.

  • The decrease in the corporate tax rate will equal a $1 billion savings to the industry.
  • Companies will be allowed to expense 100% of capital investment over five years.
  • Independent producers will benefit from a simplified tax code.

One vulnerability for the industry as oil and gas productions continue to increase is the potential for rising labor costs and field services. Michael Best Strategies will continue to track oil and gas trends in Texas and nationwide.

Beth Cubriel
Bio Link Before joining Michael Best Strategies, Beth served as the executive director and organization director for the Republican Party of Texas. Prior to that, Beth worked for U.S. Senator John Cornyn for 10 years, as organization director on his Senate campaigns, as state field director for the Senator’s Texas offices and as a legislative liaison and scheduling director for then Attorney General Cornyn. Expertise: Organization Management, and Community & State Legislative Affairs


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