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Mar 16, 2020

'Sanity will come back' to Russia-Saudi oil feud: Precision Drilling CEO

Precision Drilling's outlook turns negative after Saudis start price war

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The chief executive officer of Precision Drilling Corporation says the ongoing oil price war between Russia and Saudi Arabia will come to an end, he just could not say when.

“I don’t think anyone in Saudi Arabia or Russia wants to see WTI prices, or Brent prices in the US$20s or the US$10s,” Precision CEO Kevin Neveu told BNN Bloomberg in an interview on Monday. “So I do expect at some point in time some sanity will come back into that debate, but I’m not sure when or how long.”

“We’re battened down waiting for that to play itself out.”

Neveu said the worldwide impact of the COVID-19 pandemic may hasten the stalemate to a close.

“I think they may be surprised by the way this world economy is turning now, and I’m expecting as prices push into the 20s now that eventually they’re going to come back to the table and re-open discussions,” he said.

American West Texas Intermediate crude has plummeted in March, diving from a closing price of US$45.26 to end February to US$28.79 as of 3:50 p.m. ET Monday. WTI declined more than 9 per cent on Monday alone.

While the combination of the oil crash and the COVID-19 pandemic have hammered Canadian energy stocks in recent weeks, Neveu was optimistic that a resolution would come in ‘weeks-to-months’ and not over a matter of multiple quarters and that his company is well-equipped to weather the storm.

“Precision is very well positioned right now,” he said. “I know that our workforce has worked very hard the past several years helping the management team… ensure that we have the strength and depth to run through a sustained period of very quiet activity.”

“I expect that these things will be weeks, maybe months, probably not quarters or years.”