Posted on 01/08/2015 5:21:57 AM PST by thackney
The world's oil and gas exploration companies are expected to cut capital expenditures 17 percent this year as a deep slump in crude oil prices takes a toll on budgets...
The survey, based on an average oil price of $70 per barrel, estimates that global exploration and production expenditures will slide 17 percent to $571 billion.
If oil prices average $60 per barrel, spending should drop by 30 percent to 35 percent, according to the survey of 476 oil companies.
...under $50 per barrel on Wednesday...
North American spending is forecast to drop by 22 percent...
(Excerpt) Read more at rigzone.com ...
I would also expect there to be a shift between finding/developing oil and gas in the field and finding it on Wall Street from troubled over extended companies.
U.S. Oil Producers Cut Rigs as Price Declines
http://www.nytimes.com/2015/01/08/business/us-oil-producers-cut-rigs-as-price-declines.html?_r=0
...an announcement on Wednesday by Helmerich & Payne, the giant contract rig company, that it planned to idle up to 50 rigs over the next month sent shudders through the industry. And that came on top of 11 rigs that it has already mothballed, meaning that in just a few weeks, its shale drilling activity will be reduced by about 20 percent...
The cuts could eventually be felt in areas where the local economy depends on oil. Each rig represents about 100 jobs, from roughneck field hands to maintenance workers, and the current rig count is down 85, or 5 percent, from a recent peak in late 2014....
...the big three land drilling companies — Helmerich & Payne, Nabors Industries and Patterson-UTI Energy — are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ.”...
...day rates that oil companies are willing to pay for rigs have dropped 10 percent...
Nationwide, the oil industry employs about a million people, including extraction, pipeline construction and refining, and the boom has added about 150,000 industry jobs over the last three years, according to Citi Research....
...Because of a shortage of pipelines and the distance to major markets, North Dakota’s Bakken shale producers this month so far are selling their crude for as little as $34 a barrel....
If you don’t replace reserves that are pumped and gone, you are not in the oil business, you are going out of business.
You can slow down, even stop new production and spending money for enhanced recovery, but only for a while.
No doubt those companies that took on too much debt are going to be selling assets to those that did not.
“If you don’t replace reserves that are pumped and gone, you are not in the oil business, you are going out of business.”
Yep!
I’ll buy!
True, but one has to do two things: service debt and find money for exploration and development. The firms I am familiar with, not the majors, are doing reworks of existing wells hoping for a market change before the bulk of their debt comes due. The alternative is to raise capital and over dilute existing holders or a BK or asset sale for pennies on the dollar in a gluted market. It has happened before in boom and bust cycles. Our enemies are playing hard ball to drive out our high cost marginal producers and the meat head president will not lift a finger to support them as he hates them with a passion.
Now that it has become clear that domestic oil and gas production is the path to economic prosperity and energy security it is time to unlock the federal lands to oil exploration and development.
“North American spending is forecast to drop by 22 percent, with the biggest cuts seen in vertical drilling while shale drilling in the core areas of the Eagle Ford, Permian and Bakken “will hold up surprisingly well,” the analysts found.”
That is interesting, I thought the shale drilling was the most expensive.
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