Lynn Helms, director of the state’s Department of Mineral Resources, explains that 125 uncompleted wells need to be completed by the end of June to comply with state requirements to complete drilling within a year. Helms also points out that in June the so-called large trigger could go into effect – the oil tax incentive boosts Bakken production when the WTI crude price averages below $55.09 per barrel for five consecutive months, allowing the majority of wells to be exempt from a 6.5% oil extraction tax for up to two years.
On the other hand, further pressure on crude prices could be a boon for refiners and oil-refinery-heavy ETFs, like the PowerShares DWA Energy Momentum Portfolio (NYSEArca: PXI), which includes a 43% tilt toward the energy sub-sector. Refiners can prove durable when oil prices decline because those falling prices boost refining margins. PXI has increased 4.0% year-to-date. [Searching for Value With a Refiners-Heavy ETF]
U.S. Oil Fund
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Max Chen contributed to this article.