Zell, founder of Equity Group Investments Inc., made an investment in the region two days ago and sees “awesome” prospects for the oil-producing area, he told Alix Steel in a Bloomberg TV interview Wednesday. The firm also “re-upped” its previous investment in North Dakota’s Bakken play in anticipation of the approval of the Dakota Access pipeline. The project cleared its last regulatory hurdle after President Donald Trump took office.
The Stack formation, along with the nearby Scoop, is going through a drilling boom as it offers good returns at a $50 oil price. Continental expects to more than double output from the area’s oil-soaked rocks this year, while Marathon Oil Corp. plans to double the number of rigs in Oklahoma.
Trump’s administration is likely to be very positive for the business community and the energy industry specifically, Zell said. He also noted that OPEC’s agreement to cut production “is positive for oil producers and oil investments all over the world,” including North America.
“If you look at the crash in the price of oil, what you really saw was Saudi Arabia showing the rest of the oil-producing world what life could be like with uncontrolled” output, Zell said.
OPEC officials this week hailed implementation of the deal as “excellent” but also said that they were still waiting for evidence of its success in reducing the global oil glut. A five-nation committee said OPEC achieved more than 90 percent of its promised cutbacks in January and the group’s partners implemented almost 60 percent.
Saudi Arabia “inflicted a significant amount of pain,” leading to the agreement, Zell said. And it’s unlikely producers will cheat this time.