Oil Wildcatter Hamm Is Halting Drilling in the Bakken

Concerns over a global crude glut have pressured prices, weighing on profits.

By David Wethe

Harold Hamm, the billionaire wildcatter who helped kick off the US shale oil revolution, is once again making history. This time it’s a sign of retrenchment.

Hamm said he’s about to shut down drilling in North Dakota’s Bakken for the first time in decades because of low crude prices.

“This will be the first time in over 30 years that Harold Hamm has not had an operation with drilling rigs in North Dakota,” he said in an interview. “That tells you a whole lot right there: There’s no need to drill it when margins are basically gone.”

It’s a significant shift for the Bakken, the birthplace of the US crude renaissance that reordered global energy markets.

It’s the region where Hamm first proved that fracking techniques could be successfully applied to previously untouchable oil reserves, ushering in a new phase of US drilling that allowed the country to become the world’s top producer.

While Hamm himself is an unabashed supporter of President Donald Trump, the US oil sector’s retreat at large also underscores rising tensions between producers and the administration. Trump’s unrelenting push for lower crude prices helps his goal of lower inflation, but it’s weighing on company profits.

The average well in North Dakota’s Bakken shale requires a minimum of $58 a barrel to cover costs and generate a small profit, according to a report from BloombergNEF. That’s up almost 4% year-on-year, largely due to escalating expenses for drillers.

West Texas Intermediate, the US benchmark crude, has fallen by about a quarter during the past year, settling at $59.19 on Thursday. Concerns over a global oil glut have pressured prices. And the Trump administration is looking to unleash more supplies as it takes control of Venezuela’s energy industry.

The number of rigs drilling in the US has dropped by 15% over the past year, led by a 60-rig cut in the Permian Basin, the largest and most productive US oil region.

“A lot of people are assessing their activity in all the basins,” said Hamm, who also has oil-field assets in Oklahoma and Texas, among other locations, and is the co-founder of Continental Resources Inc.

Still, Hamm left the door open to returning to the Bakken at some point, depending on prices.

“We’re price takers, as you’re aware — not price makers,” he said with a laugh. “See what we can get.”

—David Wethe, Bloomberg News

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