DENVER: Even with oil prices surging toward $75 a barrel, US shale producers are keeping their pledges to hold the line on spending and keep output flat, a departure from previous boom cycles.
This year’s run up in crude prices, and oil output curbs imposed by the OPEC+ producers group, historically would have triggered a drilling boom. But investors are demanding financial returns over more volume and energy financiers are shifting to renewables, so shale firms are determined to stay disciplined.
“I’m still confident the producers will not respond” to the run-up in prices, said Scott Sheffield, chief executive of Pioneer Natural Resources, the largest producer in the Permian Basin shale field. A focus on shareholder returns has kept spending low, he said in an interview with Reuters.
Last week, benchmark US crude futures traded above $73 a barrel, the highest since October 2018. Back then there were 1,052 US rigs drilling but today there are much less than half that many: around 470, according to Baker Hughes data.
Shale output remains well below the January 2020 peak of 9.18 million barrels per day (mbpd), with production from the seven largest fields this month running 7.77 mbpd, or 15.4 percent below that level, according to US government data. Overall US first-quarter oil production averaged 83 percent of last year’s peak. The US recently raised its 2021 average production outlook to 11.08 mbpd due to higher crude prices, but it remains about 200,000 bpd below last year’s average.
“Oil prices will probably break $80 a barrel here shortly and I don’t see any rig adds,” Sheffield said. A spike in oilfield activity could drive up service prices, which are already up about 6 percent. Pioneer may reduce its active rigs as its operations have become more efficient, he said.
Shale’s restraint is key to OPEC’s next step. The oil producers’ group has gradually added more production, confident US shale will not return to an era of explosive growth. It will meet Thursday and consider furthering unwinding cuts from August.
“So far, activity levels support the capital discipline narrative,” said Jonathan Godwin, a senior associate at data provider Enverus. Frack fleet activity has held steady since jumping 20 percent at the start of the year, he said.
In the United States, closely held companies have contributed substantially to rig additions this year, but Sheffield said those smaller firms should not drive up volumes enough to ruffle OPEC+ producers.
“The quality of the acreage for privates is not as good as the publics,” Sheffield said, estimating private companies account for 40 percent to 50 percent of US rig count.
“We’re not seeing the upward pressure we would normally have predicted based on $73 oil,” said Paul Mosvold, president and COO of driller Scandrill, which operates super-spec drilling rigs, equipment in high demand since the oil market recovered.
Mosvold reported a slight uptick in calls as oil prices have climbed, but said they are “not substantial.”
US shale industry tempers output even as oil price jumps
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US shale industry tempers output even as oil price jumps
- Shale’s restraint is key to OPEC’s next step. The oil producers’ group has gradually added more production, confident US shale will not return to an era of explosive growth. It will meet Thursday and consider furthering unwinding cuts from August
PIF’s Humain invests $3bn in Elon Musk’s xAI prior to SpaceX acquisition
JEDDAH: Humain, an artificial intelligence company owned by Saudi Arabia’s Public Investment Fund, invested $3 billion in Elon Musk’s xAI shortly before the startup was acquired by SpaceX.
As part of xAI’s Series E round, Humain acquired a significant minority stake in the company, which was subsequently converted into shares of SpaceX, according to a press release.
The transaction reflects PIF’s broader push to position Saudi Arabia as a central hub in the global AI ecosystem, as part of its Vision 2030 diversification strategy.
Through Humain, the fund is seeking to combine capital deployment with infrastructure buildout, partnerships with leading technology firms, and domestic capacity development to reduce reliance on oil revenues and expand into advanced industries.
The $3 billion commitment offers potential for long-term capital gains while reinforcing the company’s role as a strategic, scaled investor in transformative technologies.
CEO Tareq Amin said: “This investment reflects Humain’s conviction in transformational AI and our ability to deploy meaningful capital behind exceptional opportunities where long-term vision, technical excellence, and execution converge, xAI’s trajectory, further strengthened by its acquisition by SpaceX, one of the largest technology mergers on record, represents the kind of high-impact platform we seek to support with significant capital.”
The deal builds on a large-scale collaboration announced in November at the US-Saudi Investment Forum, where Humain and xAI committed to developing over 500 megawatts of next-generation AI data center and computing infrastructure, alongside deploying xAI’s “Grok” models in the Kingdom.
In a post on his X handle, Amin said: “I’m proud to share that Humain has invested $3 billion into xAI’s Series E round, just prior to its historic acquisition by SpaceX. Through this transaction, Humain became a significant minority shareholder in xAI.”
He added: “The investment builds on our previously announced 500MW AI infrastructure partnership with xAI in Saudi Arabia, reinforcing Humain’s role as both a strategic development partner and a scaled global investor in frontier AI.”
He noted that xAI’s trajectory, further strengthened by SpaceX’s acquisition, exemplifies the high-impact platforms Humain aims to support through strategic investments.
Earlier in February, SpaceX completed the acquisition of xAI, reflecting Elon Musk’s strategy to integrate AI with space exploration.
The combined entity, valued at $1.25 trillion, aims to build a vertically integrated innovation ecosystem spanning AI, space launch technology, and satellite internet, as well as direct-to-device communications and real-time information platforms, according to Bloomberg.
Humain, founded in August, consolidates Saudi Arabia’s AI initiatives under a single entity. From the outset, its vision has extended beyond domestic markets, participating across the global AI value chain from infrastructure to applications.
The company represents a strategic initiative by PIF to diversify the Kingdom’s economy and reduce oil dependence by investing in knowledge-based and advanced technologies.
