Oilfield guys... y’all hangin in there?

[TheHammer]

I'm an idiot about the oil field so please ignore that. Why does it go from lots of money made to laying people off. Yes, I have three kids in the oil field. Two of them still working and one took a 30% cut in his pay. Not stirring the pot, just curious.

Supply and demand. When they want it they want it now, and will pay to get it. When it dips, at some point the slim profit, if profit at all, isn’t worth the ROI.

We’ll figure out in the next few weeks what companies have been managing money and which ones were surviving through debt.

[M16]

It’s not looking good.

https://www.newsmax.com/finance/streettalk/global-oil-crude-virus/2020/03/29/id/960441/

[miket]

It’s not looking good.

https://www.newsmax.com/finance/stre.../29/id/960441/

Yep. Seems like a lot of people are looking at this like its just another crash. But I have been trying to tell people that in my opinion we are in a new oil era. The old rules no longer apply. Once shale took over it changed the dynamics. Several of the guys I have talked to that are more uhhhh experienced in the oil business told me in 2014 that within a year it will bounce back and we will be over $100 again. "It always goes back up and we will be crazy busy again". Never happened. Been plodding along for over 5yrs. And only done this well because OPEC has been withholding production to prop up the price.

Like I have said, this is the big one. Many companies must die, and they will. If not, as soon as price goes up a little they will hit it again and force it right back down.

Money is drying up, investors have bailed. In the end, as bad as it is, it is good. This will kill the inefficient ones. Survivors will be smarter and leaner. And cheaper. It will come back, but with unless OPEC controls production, or we impose some tariff or something like that, the good old days are over for a long time.

[miket]

I'm an idiot about the oil field so please ignore that. Why does it go from lots of money made to laying people off. Yes, I have three kids in the oil field. Two of them still working and one took a 30% cut in his pay. Not stirring the pot, just curious.

IMO we have allowed ourselves to be subject to the whims of a cartel. OPEC ( in the end, the house of Saud ) can, and does, literally control the price of oil. Their oil is so abundant, easy and cheap to produce they control the market on the supply side. They turn it up or down based on what they want or need. Their only weakness is that their national budget is dependent on oil money.

This mean we live and die by their decisions. When its up we hammer down and produce hard and fast till they change their mind. Then we slow down, lay off and wait. Then they change their mind again and hammer down again. Back and forth.

But now we have gotten very fast and hammering down, and very productive ( but expensive ). So we have taken away some of their power and control. They are scared. So they are trying to kill our oil business ( IMO ) again. They admit that is what they were doing in 2014. We came back cheaper and more efficient after 2014.

As a manufacturer what I have seen is a business that is rife with ineffeciency and poor planning. On top of the already hard to predict nature of drilling incredibly deep complex holes in the ground and producing oil trapped in shale formations.

Its a crazy, rough, high tech, , labor intensive, unpredictable, expensive business

[Burnadell]

It seems that the US encourages OPEC to reduce production when global oversupply forces oil prices to drop, and we get upset when they don't, yet I have never heard of any US oil producers cutting their/our production to help with the oversupply problem. Instead, the oil prices cause them to reduce EXPLORATION but not production on existing fields.

Tell me if I am wrong.

[munchie]

Still working but just had to take a large pay cut to keep my job.

[M16]

It seems that the US encourages OPEC to reduce production when global oversupply forces oil prices to drop, and we get upset when they don't, yet I have never heard of any US oil producers cutting their/our production to help with the oversupply problem. Instead, the oil prices cause them to reduce EXPLORATION but not production on existing fields.

Tell me if I am wrong.

You’re right. But that’s the difference between a monarchy and capitalism.

[boh347]

Ugh

Texas oil companies may soon cut back production, both because of a looming lack of available storage space and because wells are becoming uneconomical at $20 per barrel WTI.

Many regional grades are trading lower than that--approaching negative territory.

“Large-scale production interruptions appear inevitable and imminent,” according to Pioneer Natural Resources and Parsley Energy executives, who wrote to the Texas Railroad Commission asking the industry body to order a production cut, Reuters reports.

One commissioner, Ryan Sitton, already suggested cuts, possibly in partnership with OPEC, earlier this month, before the crisis really hit.

Now, the cuts, with or without OPEC, seem inevitable, and the industry is eager to start cutting, calling on the regulator to effect the cuts beginning in May.

Meanwhile, pipeline operators in Texas are asking producers to stop pumping oil because storage space is filling up.

The storage problem is becoming critical on a global scale. According to the chief analyst of data analytics firm Kayrros, if storage continues to fill up, oil prices could fall close to zero.

[miket]

It seems that the US encourages OPEC to reduce production when global oversupply forces oil prices to drop, and we get upset when they don't, yet I have never heard of any US oil producers cutting their/our production to help with the oversupply problem. Instead, the oil prices cause them to reduce EXPLORATION but not production on existing fields.

Tell me if I am wrong.

You’re right. But that’s the difference between a monarchy and capitalism.

Yep. We have laws against monopolies and price fixing. If one company lowers production they just lose out, unless everyone does. If you convince everyone to its illegal....

Collusion

[miket]

In the end this is no different than having all of our manufacturing, medicine etc being done overseas ( China ) . We are weaker as a nation because we are at the mercy of other nations/powers. It is unbelievably foolish to have allowed ourselves to get in this position. This is a matter of national security. We must be able to feed, clothe, house, medicate and fuel ourselves independent of the world. Not saying we shouldnt trade and all that. But handing over your ability to survive on your own is asking for death.

[Rcole1310]

In the end this is no different than having all of our manufacturing, medicine etc being done overseas ( China ) . We are weaker as a nation because we are at the mercy of other nations/powers. It is unbelievably foolish to have allowed ourselves to get in this position. This is a matter of national security. We must be able to feed, clothe, house, medicate and fuel ourselves independent of the world. Not saying we shouldnt trade and all that. But handing over your ability to survive on your own is asking for death.

100% agree with this. The cause: greed. Companies choose wider margins over national security. But...I bet many of them would argue that their responsibility is profits, not national security.


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[tex4k]

^^^^^^^^^^
I second that opinion!

[bphillips]

Anybody else believe that as more and more small players go under or are forced out it will stabilize a little more? It seems like when all that is left in the big fields is the majors they can keep production where it needs to be to be profitable without technically price fixing

[Burnadell]

Anybody else believe that as more and more small players go under or are forced out it will stabilize a little more? It seems like when all that is left in the big fields is the majors they can keep production where it needs to be to be profitable without technically price fixing

It has come full circle. The majors started leaving the US in the 80’s? And 90’s?, selling their production/reserves to the independents so they could concentrate on offshore and overseas. Then...a few years ago when the shale explosion hit, they started moving back and exploring domestically.

I wouldn’t think it will make a lot of difference in production if/when the smaller independents go broke. Their production and reserves will be bought by someone else. It will just change hands.

[bphillips]

It has come full circle. The majors started leaving the US in the 80’s? And 90’s?, selling their production/reserves to the independents so they could concentrate on offshore and overseas. Then...a few years ago when the shale explosion hit, they started moving back and exploring domestically.

I wouldn’t think it will make a lot of difference in production if/when the smaller independents go broke. Their production and reserves will be bought by someone else. It will just change hands.

I just see in my mind the majors scooping them up instead of other small investors as the allure of oil seems to be wearing off from Wall Street. Maybe not but not sure I would like that anyway