America's beaten-down oil drillers will be watching their pennies even as Republicans and President Donald Trump aim to slash taxes for U.S. companies, shale oil pioneer and former Trump energy advisor Harold Hamm said Friday.
While Hamm says that tax cuts are the "icing on the cake" that businesses need to "turn it loose," he also believes the U.S. oil industry has entered a new era of fiscal discipline.
That could be a concern for Republicans, who are counting on companies to use their tax savings to raise wages and invest in capital projects that stimulate the economy. The GOP is banking on economic growth to pay for much of the $1.5 trillion tax cut.
A new analysis by the Joint Committee on Taxation concluded that the Senate tax bill would add more than $1 trillion to federal deficits over the next 10 years, even after accounting for economic growth.
Asked what his company, Continental Resources, will do with its tax savings, Hamm suggested the Oklahoma City-based driller will focus on shoring up its bottom line.
"We haven't had a lot of profit in our sector of the business" during a three-year oil price downturn, he told CNBC's "Squawk on the Street" on Friday. "Perhaps going forward maybe we could have some profit to look at."
Hamm said the days of drillers running flat out and spending with abandon to raise their oil production are over. He said that doesn't work in any industry, and certainly not in the oil patch.
Earlier this year, Hamm cautioned fellow drillers not to drill themselves "into oblivion."
"That's not the deal anymore, and finally the analysts and everybody else caught on. Shareholders caught on and said, 'We're not going to put money in there just for growth's sake. We want a return, a good return on capital employed,'" he told CNBC on Friday.
"That new dynamic has entered into the market, and it's affecting everybody out here, and thank God it's there," he said.
That mindset is reflected in a closely followed weekly count of oil rigs operating in U.S. fields, according to Hamm. After crashing from roughly 1,600 rigs in 2014 to a low of about 300 last year, the count has stabilized around 750 rigs.
Hamm is not the only executive who believes tax cuts will boost the economy. In a CNBC survey of chief financial officers, 83 percent believe tax cuts will lead to improved economic growth.
But the outlook is mixed for American workers. While 70 percent of CFOs surveyed say they expect tax cuts to create jobs, just one-third think it will lead to higher wages.
As for what their companies do with tax savings, 29 percent said they'll buy back stock and 12.5 percent said they'd increase their shareholder dividend. About 8 percent said they'd increase head count and nearly 21 percent said they'd invest in new plants, equipment and technology.