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A steep decline in oil prices has forced companies to stack rigs and curb their spending on new production. But energy industry officials said Thursday that many companies will continue to make a profit even when prices are hovering in the range of $50 to $60 per barrel.

Shawn Wenko, executive director of Williston Economic Development, said a number of rigs operating in the prolific Bakken oil play have been parked in response to oil prices declining from around $100 per barrel last June to around $50 per barrel by the end of the year. Since then, prices have rebounded to around $60 per barrel.

North Dakota’s rig count stood at 127 on Thursday, down from 189 a year ago, according to state information.

“Moving forward, it’s OK to slow down and take a breath,” said Wenko, who addressed a Billings energy forum via video link. “Some say we’ve gone from insanity to just a little bit crazy.” Wenko was one of a half dozen experts who spoke to the Energy Briefing 2015 gathering, hosted by Big Sky Economic Development. About 100 people attended the forum at the Northern Hotel.

Wenko said oil service companies operating in the Bakken are trying to get lean and mean in response to lower prices. However, the local job service agency continues to report many openings. People searching for housing have more choices, and some landlords are discounting their rents.

Meanwhile, Williston officials are moving forward with many projects, including the construction of a $56 million high school, a $100 million wastewater treatment plant and the relocation of the Williston airport, Wenko said.

Dave Ballard of Billings-based Ballard Petroleum said describing the industry’s current conditions is part wake, part pep rally. Few would dispute the fact that Yellowstone County has reaped substantial economic benefits from the massive oil development taking place in the Bakken.

“As we see cutbacks in activity, there is bound to be some ripple effect in Billings,” Ballard said. “It will not be on a one-for-one percentage basis, but when you hear what some of the headwinds are, it will help you form your own ideas about how things might change here.”

Ballard said many oil and gas production companies were busy planning their 2015 expenditures, when prices plummeted.

“These companies have been watching prices drop since June of last year and had been making small changes in their budget planning for 2015. Then, oil prices fell off the cliff on Black Friday,” the day after Thanksgiving, when many Americans flock to shopping malls looking for deals on Christmas gifts, Ballard said.

As a result, “There were some very significant revisions to capital budgets. So the adjustments we read about and hear about are in the range of a 40 to 70 percent reduction from what they had been,” Ballard said.

Although oil prices are about 50 percent lower than they were last summer, production in the Bakken has continued at record levels. Ballard said he has been asked whether companies would be better off by sitting on their production until prices rebound.

That may be an option for some of the major producers, such as Continental Resources.

“So long as you’re able to create value by drilling, then companies will generally want to push development as fast as they can,” Ballard said.

But not all of the news is bad in the oil patch. As oil prices have declined, the cost of producing oil has also fallen, Ballard said.

“We will have economical wells being drilled at $50 oil and even at $40 oil,” Ballard said. “But mostly that’s going to be in the sweet spots. It’s not likely a basinwide event. My sense is that many companies are rolling up their sleeves, looking up ways to innovate and asking for all the price reductions from their vendors, and expecting that they’re going to find a way to grow company value, even at $50 oil.”

While Ballard doesn’t see a return of $100-per-barrel oil anytime soon, there’s a decent chance that prices could show some recovery, he said.

Rick Leuthold, director of business development for Sanderson Stewart, said the Billings engineering firm has had a presence in Williston for several years. Although some projects have been put on hold, activity will continue.

“There’s still a tremendous amount of needs for Williston and Watford City,” Leuthold said. “We haven’t seen a lot of reduction in housing prices or motel rooms.”

Leuthold said that a number of clients have opted to put projects on hold in the wake of the slowdown, but many people anticipate that oil prices will bounce back.

“It’s time to double down,” Leuthold said. “There are still significant needs in that market. They have a real need for single-family houses. I’m always optimistic. I tend to throw the rainbows out. This is a great time to be in the Williston market. They’re positioned for a great decade moving forward.”

Mark Mueller, regional manager for SM Energy, said smart companies are able to withstand the peaks and valleys of the oil and gas industry.

Saudi Arabia, the world’s largest oil producer, has seen its influence decline in part because of the boom in U.S. oil production. Mueller said SM Energy is well positioned to withstand the downturn.

“I work for a very smart company,” Mueller said. “We don’t have to slam on the brakes, but we do have to manage our business wisely to manage our cash flow.”

The drive to drill

Despite today’s lower prices, the oil industry must continue to add production just to replace reserves that have been used up. Likewise, lower prices will likely boost demand for gasoline and diesel fuel, which will lead to a gradual increase in oil prices, Mueller said.

“Beyond that, we’re managing our business wisely,” Mueller said.” We haven’t had any layoffs.”

Brian Cebull, of Nance Resources and GTUIT, said he’s optimistic about the future.

“If you’ve been in it five or 10 years, you know that you go through cycles. and you realize that good things come out of the these cycles,” Cebull said. “We think this will be healthy for the oil and gas industry.”

GTUIT makes equipment and provides services that help operators capture and process natural gas that would otherwise be flared.

Cebull said America’s oil and gas industry has evolved from high-risk ventures where wildcatters went searching for a big strike. In shale plays such as the Bakken, there’s less risk because drillers know where the oil is.

“It’s a known resource. The question is how much it costs to get it out of the ground and what price you get for the oil,” Cebull said.

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