Posted on 11/12/2015 11:10:29 AM PST by thackney
...there was hope that this downturn would be kind of like 2009, where prices fell sharply in the wake of global economic collapse, but shot back up just as quickly - leaving little collateral damage behind. It's clear now that's not going to happen. The 2009 collapse was driven by a sudden drying up of demand. This time around there's just too much supply -- especially in the United States. And it's simply not going away. According to the Energy Information Administration, domestic crude oil output peaked in April at 9.6 million barrels per day. Since then it has slipped to 9.2 million bpd, about where it was a year ago, when the bust began.
This isn't how it's supposed to happen. In every commodity, everywhere, when prices plunge the high-cost producers (U.S. tight oil and Canadian oil sands) get washed out and the low-cost producers (Saudi, Iran, Iraq) consolidate market share. That's what the Saudis were hoping for when last November they decided to hold oil output steady. And yet, America's high-cost oil producers are not going off quietly to meet their maker. Rather they are kicking and screaming, moving quickly to slash costs, cut rigs, cut heads (200,000 in layoffs so far), and demanding discounts from suppliers. They are getting leaner, smarter, better.
"Every company is in the process of restructuring," says Ken Hersh, CEO of private equity giant NGP Energy Capital Management. Some might end up in bankruptcy court, but for the vast majority it'll be a multi-year slog through the trenches before emerging on the other side, battered but stronger. "It's a tug of war between American ingenuity and the quality of the rocks. Ingenuity is winning. It's the great thing about our system, and it means that you can make money at $60 oil."
(Excerpt) Read more at forbes.com ...
Another 67 layoffs yesterday by Baker-Hughes in the Farmington area (San Juan Basin).
This Week in Petroleum
http://www.eia.gov/petroleum/weekly/
I was looking for a widget that you could post on FR, but they don’t work w/o javascript enabled.
Things are not all that rosy on this side of the world. From today’s UAE paper:
From what I’ve seen, all the ME producers require a higher price for oil than the current level for the long term to keep government spending where they need to in order to maintain their accustomed lifestyles. My thoughts anyway.
Yes, I don’t believe it can last many years at this year.
Banks Put Cash Aside To Cover Energy Loans
July 15, 2015
http://www.ugcenter.com/banks-put-cash-aside-cover-energy-loans-810086
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