[Al Czervik]

Is anyone else starting to see a slowdown in the oil and gas industry?

I was at an oil and gas networking event earlier this week and of the E&P companies I spoke to, every single one of them (except one) is starting to lay down rigs. At this point it is a going from 3 rigs to 2, or from 2 to 1, rather than stopping their drilling program, but this will definitely affect the services market. It sounds like the backlog and waiting time for rigs is about to evaporate, if it hasn’t already done so.

These are all Texas based companies, so it mainly applies to work in the Permian and the Eagleford, rather than the Williston. My impression is the Williston projects have higher margins, so they are probably in better shape, but was curious as to what other guys were starting to see.

Any thoughts?

[komatiite]

No shit Sherlock, have you seen the price of oil lately?

[Al Czervik]

(11-21-2014 04:46 PM)komatiite Wrote:  

No shit Sherlock, have you seen the price of oil lately?

Appreciate the insightful and helpful reply.

As of 3 weeks ago, not a single company I know was laying down rigs and oil was at $80 (vs. today's $77 after the roll).

[DjembaDjemba]

Its expected. Drop in price of oil is good, it's a tax cut to the consumer.

[Kissinger2014]

I don't work in the industry, but I'm a regular investor in E&Ps and listen to conference calls/read earnings releases. Current drilling hasn't been too affected by the recent drop in oil prices, and because many companies have to drill to keep licenses (or have already paid for renting drills/equipment) you likely won't see much of a slowdown in the near few months. For a data point, see Schlumberger's recent earnings report. The major concern is a few months down the line, especially if prices continue to either fall or even stall. Then you could see a market slowdown in work really quickly, which hurt employment figures, and have a rippling effect through the rest of the economy.

[Feo]

It's because of Russia.

[Aliblahba]

I've seen a large amount of packed vehicles leaving in droves this weekend. Lot less people already. L

[Kissinger2014]

(11-22-2014 04:27 PM)Feo Wrote:  

It's because of Russia.

It's not because of Russia. It's, in part, because of Saudi Arabia, which is trying to keep market share by discounting its oil, which is hurting some unconventional production areas that need oil above $80 to make money. It's also just sheer luck. No one was predicting such a dramatic spike in U.S. oil production five years ago. There is a supply glut combined with tepid demand from Europe and Japan.

[oilbreh]

(11-23-2014 09:59 AM)Kissinger2014 Wrote:  

(11-22-2014 04:27 PM)Feo Wrote:  

It's because of Russia.

It's not because of Russia. It's, in part, because of Saudi Arabia, which is trying to keep market share by discounting its oil, which is hurting some unconventional production areas that need oil above $80 to make money. It's also just sheer luck. No one was predicting such a dramatic spike in U.S. oil production five years ago. There is a supply glut combined with tepid demand from Europe and Japan.

Its a bit more complicated
Saudi wants a pipeline to europe. US wants it also the pipeline to take control away from russia. Asad is in the way of this. Hence the whole helping syria rebels and isis crap going on now. Low oil weakens russia. Supply demand and the new production from fracking did not flood the market in a matter of 2 months to gave a 20 percent drop.

[WestIndianArchie]

(11-23-2014 03:41 PM)oilbreh Wrote:  

Its a bit more complicated
Saudi wants a pipeline to europe. US wants it also the pipeline to take control away from russia. Asad is in the way of this. Hence the whole helping syria rebels and isis crap going on now. Low oil weakens russia. Supply demand and the new production from fracking did not flood the market in a matter of 2 months to gave a 20 percent drop.

My Islamic peeps and my oil and gas peeps all say the same thing.

But the average man never hears about the pipelines when they hear that such and such got bombed today.

WIA

[Darius]

http://sputniknews.com/voiceofrussia/voi...rket-1957/

Apparently George Soros published a plan that would punish Russia for it's actions in Ukraine and Crimea. It revolved around flooding the market with cheap oil to hurt the Russian economy.

[Tex Pro]

Ouch. WTI is under $70/barrel.

WTI is trading currently at approx. $68/barrel for a Jan 15th contract.

http://www.bloomberg.com/energy/

At these prices (assuming they say at this price or go lower), there is definitely going to be a big slowdown in capex next year in the shale plays in the USA.




Thus, hold on to your hats, things are about to get ugly in the oil & gas sector.

[Tex Pro]

(11-23-2014 03:41 PM)oilbreh Wrote:  

(11-23-2014 09:59 AM)Kissinger2014 Wrote:  

(11-22-2014 04:27 PM)Feo Wrote:  

It's because of Russia.

It's not because of Russia. It's, in part, because of Saudi Arabia, which is trying to keep market share by discounting its oil, which is hurting some unconventional production areas that need oil above $80 to make money. It's also just sheer luck. No one was predicting such a dramatic spike in U.S. oil production five years ago. There is a supply glut combined with tepid demand from Europe and Japan.

Its a bit more complicated
Saudi wants a pipeline to europe. US wants it also the pipeline to take control away from russia. Asad is in the way of this. Hence the whole helping syria rebels and isis crap going on now. Low oil weakens russia. Supply demand and the new production from fracking did not flood the market in a matter of 2 months to gave a 20 percent drop.

There has been a huge spike in production from US shale producers recently at the same time that there has been less demand for oil from Europe and Asia. Remember you have to look at both supply and demand. The Saudis need to kill this excess shale oil production off in order to have oil prices stabilize without a large production cut with would hurt their bottom line.

Now, they may also want low oil prices to pressure Iran & Russia over their Syria stance, but that seems like a side issue to slowing down the shale plays in the USA which are a huge threat to the Saudis.

[Tex Pro]

[Aliblahba]

I'm switching to a job in production to play it safe. Companies are already starring to stack rigs. When this happens there will a mad dash for jobs. Back in Houston during the 80's whole skyscrapers sat empty with for sale signs hanging on the side. It gets ugly so be prepared.

[Sp5]

Should be good for the airlines and anyone traveling.

[Tex Pro]

[Tex Pro]

OPEC's message to US shale: Drop dead

http://money.cnn.com/2014/11/28/investin...index.html

[scotian]

I don't know too much about the geo-political goings on with OPEC and how much they influence global oil prices but all I can say is fuck them, sure they can try to squeeze us non-OPEC nations, go ahead, we have diverse economies and can handle low oil prices, unlike those shit holes. At least that's how I see it, sure it will suck for us oil workers if prices are low especially those on the exploration side. Fortunately for me, I work maintenance shut downs in refineries which happen every year regardless of the price of oil, even if that went to shit, I have a skilled trade and can work in a number of industries that are non oil and gas related. I survived the economic shit storm of 08/09' when oil went from $140 down to about $35 in a couple of months, I learned my lesson and since then have made a point to save as much money as I can, I could afford to stay down here in South America for two years if I want, but I"m confident that I'll have a job to go back to in four months.

[TejasRojo]

The Saudis do what they're told. The americans want to punish Russia (and maybe Venezuela) who need higher price per barrel and also to force consolidation of the oil industry. Halliburton is buying Baker Hughes. This is at the big level. Wait for the small fry to get bought up and closed out. If you're a regulator, do you want 500 companies or 50 or 5? So CAPEX for new expenditures goes away, but these big companies will be buying out the competition.

[Tex Pro]

The Shale Bust Arrives: November Permits For New Shale Wells Tumble 15%:

http://www.zerohedge.com/news/2014-12-01...-tumble-15

[Cattle Rustler]

Oil went up 4% today.

Lol to all the doom-and-gloomers.

It's unrealistic for it to go down for so long or to stay down. It's just countries AMOG'ing each other.

[Easy E]

WTI is still under $70/barrel. This shit is crashing, and it is crashing hard. Somebody is going to have to give.

That is why I suspect these low prices are going to last a while since OPEC is keeping its target of 30 million barrels per day until at least June 2015 when they meet again. That means tough times for the shale oil guys in the USA. The overleveraged and weak players are going to get their asses handed to them.

[Dr. Howard]

I wonder if this will affect hybrid and electric car sales or if they will still continue due to their 'iphone' like status.

[Peregrine]

@cattle rustler: and crude is down 2.33% right now. Who cares about day to day movements. Look at a longer time horizon, wider trends, and a world outside your own (or any individual's) limited perspective.