8,468 Active Recruiters     Over 2 Million Candidates Globally

Advanced
  1. Keep me logged in
  2. forgot password
cancel

Checkout Jobs Basket (0)

You can checkout a maximum of 150 jobs.

Signup Better for Candidates

  • Create a free virtual CV and let recruiters find you
  • Automatically have your profile matched to suitable Oil & Gas positions
  • Link to your profile using it as a free online CV
  • Store all your employment documents to your profile for easy sending
  • Always receive feedback on positions applied for

Signup Better for Recruiters

  • Suitable candidates automatically matched to your position
  • View candidate profiles for free
  • No more waiting for candidates to respond to job advertisements
  • Only ever pay when you match a candidate to a position
  • No more cold calling and sorting through out dated CVs

U.S. Shale Struggles To Ride Out The Storm

Published in Oil Industry News on Wednesday, 8 January 2020


Graphic for News Item: U.S. Shale Struggles To Ride Out The Storm

U.S. drilling activity continued to contract in the fourth quarter, and the sense of gloom among shale drillers in Texas remains palpable.

The latest data from the Dallas Federal Reserve shows that the business activity index – a broad measure that captures conditions in the energy sector in Texas – remained in negative territory, although narrowed slightly from a reading of -7.4 in the third quarter to -4.2 in the fourth. Oil producers are trying to ride out the storm, but that means a steep fall in activity for service firms. The activity reading for the oilfield services segment saw a -22.1 reading. Anything in negative territory signals a contraction.

Hot Tip

Looking for your next job? Register and build a detailed profile on Oil and Gas People so recruiters can find you. Apply for jobs with one click, store all of your employment documents in one place and receive job alerts as soon as suitable positions go live.

E&P firms specifically saw modest growth, with the index rising from zero to 5.4 in the fourth quarter. But employment posted a third consecutive negative reading.

The Dallas Fed Energy Survey offers a treasure trove of information. The quarterly release asks a series of questions, to which oil and gas executives respond anonymously, which allows them to speak frankly. The survey reached 170 firms, 111 of which were E&Ps, and other 59 that were oilfield services companies. As such, it produces a kind of unvarnished gauge of sentiment in the Permian, although it should be noted that a handful of oil majors make up an increasingly large portion of activity, something that is not captured in the survey.

For several quarters, the surveys have been downbeat, and the fourth quarter was no different.

The survey found that 41 percent of all firms expect to cut spending in 2020, while 34 percent expect to increase capex. The vast majority of companies are basing their 2020 budgets off of a WTI price between $53 and $56 per barrel.

The responses on breakeven prices were also revealing. Only 41 percent of companies said that they could breakeven at $50 per barrel, while another 40 percent said they need prices above $55 per barrel.

In the comments section, there were a handful of themes that respondents kept circling back to: the lack of access to capital markets, financial struggles and consolidation in the services sector.

Below are a selection of comments from various oil executives, which offer a glimpse into the mind of Texas drillers:

  • “We are having to divest properties in order to keep from dropping employees.”
  • “Many nonconventional shale wells are not achieving production expectations, thereby constricting cash flow for new wells and projects.”
  • “Small upstream oil and gas operators may find it increasingly difficult to schedule drilling and completion services as consolidation of service companies continues to occur.”
  • “The capital infusion has all but ceased for small E&P companies with regard to developing properties.”
  • “Continued weak oil prices and high costs are squeezing my margins. It is very difficult to find any projects that make sense economically.”
  • “Increasing regulatory pressure in Colorado has resulted in a complete loss in value of wells in that state, and in my mind, it has become a ‘no investment’ state.”
  • “Henry Hub gas and NYMEX West Texas Intermediate oil index prices are now meaningless to me as purchaser deductions have brought the real-world price to $1.60 per million cubic feet (Mcf) in West Texas and Central Oklahoma. Major new worries are starting to be operator solvency/bankruptcy.”

One would be hard-pressed to find a positive comment among the dozens submitted. There were a few, but they mostly related to conditions outside of Texas shale. For instance, one executive at an oilfield services firm said “Offshore/International is looking good.” There was not much else in there that offered unalloyed optimism.

Flaring was a hot topic in the survey. Some blamed inadequate pipeline infrastructure, but others acknowledged the problem, with more than a few respondents saying that rampant flaring was “wasteful” and that Texas regulators need to step in.

One executive called for the government to ration production in order to balance the market. “The tax base of producing states is declining and being wasted. Venting and flaring of natural gas are ridiculous wastes of resources and a sign of imbalances,” the executive said. Yet another worried that the practice of flaring was “energizing environmentalists and encouraging investment funds to go ‘green,’ which will further constrain oil and gas investments.”

The doom and gloom preceded the latest conflagration in the Middle East. As of Friday, WTI was approaching the mid-$60s per barrel, which may lead to an entirely different assessment on market conditions in the next survey.

Source: oilprice.com

Please leave comments and feedback below





Tags

American Oil and Gas, Chevron Oil and Gas, Gulf of Mexico Oil and Gas, Oil and Gas News








Oil and Gas News Archive


Latest Oil & Gas News







Featured Companies

  • View All JobsOMPA

    Offshore Marine People & Academy (OMPA) is a global provider of personnel and training to the renewables, oil & gas, telecommunications and marine industries.

    With over 15 years' industry experience, we work with candidates to match them to the right roles and equip them with the skills and knowledge needed to succeed. Our job is to exceed your expectations.

    Visit us online: offshorempa.com

  • View All JobsChronos Oil and Gas

    Chronos Oil and Gas is one of the fastest growing and best placed recruitment agencies in the sector.

    With over 300,000 candidates on our database and an international team of specialist recruiters we work with clients to staff major projects around the world.

    Register your CV at www.chronosoilandgas.com

  • View All JobsNatural Resources

    Natural Resources is a UK based recruitment company providing personnel of all disciplines and nationalities worldwide.

    We represent clients and candidates at all levels who operate globally within oil & gas, renewables, nuclear, power, mining, marine, drilling, construction and petrochemicals. Our client base includes energy and construction.

    Visit Natural Resources at natural-resources.com