March 8, 2020.
Here we go again. Aren't you glad you chose a career in this industry?
10 replies (most recent on top)
Let's go skeleton crew. Time to trim the fat. Too many people collecting pay checks on the backs of the hard workers. We know who we are and we are fine. If you're worried maybe you should have stepped it up. You only have yourselves to blame.
I guess we should have some faith and believe that our ace finance team led by KF, KH and the rest of the wizards on that staff have been developing and executing a plan for our survival as the oil market was headed below $40. Or might we read otherwise in the morning's Chronicle?
Saudi Arabia and Russia aren't the real problem here. They are merely taking advantage of the situation for market share. Short sighted? Reprehensible? Selfish? Yes. But looking at the big picture, the current situation is the result of a much larger supply and demand problem.
The industry has been in a self-inflicted oversupply situation since 2014. Oversupply has mainly been driven by the unconventional treadmill. Hundreds of US producers all mindlessly doing the same thing: grinding out low margin shale wells and ratcheting up global production. Most of those wells had questionable economics at $40-50 oil, but producers like Noble kept drilling them anyway. Everyone knew a recession would eventually hit, demand would fall and prices with it. Still, that knowledge did little to slow them down.
Now the recession is finally here and demand is dropping off a cliff. Covid-19 is speeding the decline, yet it’s only the trigger and accelerant. Simultaneously, Saudi and Russia are shamelessly tossing another log on the fire. But those issues merely distract form the real problem: Noble and the US oil industry is over reliant on unprofitable shale production.
Despite all the positive hype over the last few years shale drillers are finally being confronted with reality. They are in fact the high cost producers and cyclical forces are about to put most of them out of business. This was entirely predictable.
With the oil price driven by the Saudi vs Russia price war and demand loss that is driven by COVID-19 quarantines. It’s a double whammy. COVID will likely go away in six months and the stock market return after that but the Saudi/Russia production likely is a long lived event. The question being how long can they hold their breath at sub $40 oil.
On the upside, if this keeps up you can use your stocks as toilet paper and save money.
Feeling pretty hopeless.
a company cannot cut its capital budget by 1/3 and keep all of its employees. Unfortunately, the useless BOD and most (probably all) of the executives will keep their jobs. We should expect a big round of layoffs soon and a follow-up round in October/November as the 2021 budget is prepared.
Time for something radical. All onshore companies need to reduce production ASAP. Salary cuts across the board instead of mass layoffs, including presidents and CEOs
Guess those NBL stock options at 31.50 won’t ever come into play anytime soon! Worthless! Ha!
Gee, do you think they'll be having another layoff? /s
- and S&P 500 futures limit down the max 5% and trade gas been suspended.
Good thing we’re in good hands!
Yes, the world is ending AGAIN. Prompt oil is currently 30.57 with nat gas at 1.62. Hopefully our hedge book is in good hands and has been handled appropriately.