Saudi Arabia to US oilmen: cut costs or get out

Houston

THE world's most powerful oilman brought a harsh message to Houston for executives hoping for a rescue from low prices: high-cost producers - many of them sitting in the room - need to either "lower costs, borrow cash or liquidate".

For the thousands of executives attending the IHS CERAWeek conference, the message from Saudi Arabia oil minister Ali al-Naimi means deeper spending cuts, laying off more roughnecks and idling drilling rigs. "It sounds harsh, and unfortunately it is, but it is the most efficient way to rebalance markets," Mr al-Naimi told the audience in Houston on Tuesday.

As many as 74 North American producers face significant difficulties in sustaining debt, according to credit rating firm Moody's Investors Service. Shale explorers from Texas to North Dakota will be "decimated" in coming months amid a wave of restructurings and bankruptcies, said Mark Papa, the former EOG Resources Inc chief executive officer who helped create the shale industry more than a decade ago. The survivors will be more conservative, Mr Papa, who is no…