Saudis cut oil production, but will Texas keep fracking?

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Kathleen Lavine / Denver Business Journal

If drilling production does decline, the oversupply problem will solve itself, Chris Faulkner said.

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Nicholas Sakelaris

Staff Writer- Dallas Business Journal

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Faced with plummeting oil prices, Saudi Arabia slowly, but surely, turned the spigot on oil production.

Oil production fell 69,900 barrels per day in Saudi Arabia from September to October, according to the latest Organization of Petroleum Exporting Countries report.

Total OPEC production has fallen 226,000 barrels per day in one month.

World oil prices, called Brent, fell below $80 while West Texas Intermediate prices traded around $76 Wednesday.

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There's growing concern that Saudi Arabia, which can produce oil much cheaper than the U.S., would continue producing oil at the same rate, creating further supply glut and crushing the Texas drilling boom, which relies on more costly horizontal drilling and hydraulic fracking.

I reached out to Chris Faulkner, the CEO of Breitling Energy, Wednesday to get his take on oil prices and what this means for shale drilling in Texas.

Right now, Saudi Arabia is beating its chest to prove it's the "de facto swing supplier of the world," Faulkner said.

But there are signs that the Saudis won't be able to keep the charade up. Faulkner points to the sale of oil to Asia, which already is trading at a higher price, a sign they could be expecting lower production in the future.

Saudi Arabia produced 9.6 million barrels per day in October while the U.S. produced 8.6 million barrels per day, with 3.1 million barrels coming from Texas alone. The U.S. numbers are from August, the most recent numbers available.

Here his take:

How low will oil prices get?

Nicholas covers the energy, manufacturing, aviation and transportation beats for the Dallas Business Journal. Subscribe the Energy Inc. newsletter