Exxon-Pioneer tie up could squeeze US shale oil suppliers, pipelines
© Reuters. FILE PHOTO: A worker operates equipment on a drilling rig near Midland, Texas, U.S., February 12, 2019. Picture taken February 12, 2019. REUTERS/Nick Oxford/File Photo) could further restrain output growth in the largest U.S. oilfield, squeezing pipeline companies and suppliers, executives and energy advisors said.
"With this Pioneer deal, there is a possibility that Exxon might say they've achieved that growth target for Permian production and so they don't have to grow as rapidly as they originally intended," says Ajay Bakshani, director of analytics at research firm East Daley Analytics. Overall, oil companies have cut 36 active drilling rigs in the Permian in the last year, a 10% drop. Rigs are an indicator of future output. Dropped rigs affects the broader oilfield service business and pipelines as the consolidation means less equipment rentals, fewer roughnecks and customers to compete for their business. Past mergers have led to job cuts at acquired companies.
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