WTI is now crossing 33 mark. I am thinking whether it was a hasty decision by HAL to cut all those experienced tech employees who may not return to HAL again if needed in near future.
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Yawnnnnn, nothing happening till end of August as far I'm concerned. I'll take the Trump change and see how job market looks after that but not expecting anything new.
COVT-19-Threatens to Hobble the U.S. Shale-Oil Boom for Years
Drillers that survive pandemic are likely to be leaner and less inclined to invest freely in growth
By Collin Eaton and Rebecca Elliott May 24, 2020 5:30 am ET 'WSJ'
American shale drillers helped turn the U.S. into the world’s top oil producer, topping 13 million barrels a day earlier this year. It likely will be years—if ever—before they reach such heights again.
That is the growing view among top oil and natural-gas executives and experts, who say the coronavirus pandemic is going to thin the ranks of shale companies and leave survivors that are smaller, leaner and less able to pursue growth at any cost.
Shale companies led a renaissance of American oil production, helping to more than double output over the past decade. That propelled the U.S. past Saudi Arabia and Russia and made the country an important competitor in the geopolitics of energy and global markets.
But before the new coronavirus sapped global demand for crude, causing shale-drilling companies to shut off wells en masses to avoid losing money, many were struggling to turn a profit, and investors had soured on the sector, restricting companies’ access to capital.
The Other Side of the Boom
Oilfield activity and output are plunging afters yearlong shale boom that made the U.S. the world's top oil producer. Quarterly change in drilling activity and investment* RECESSION Rig count
Oil and gas investment 2008 field production of crude oil, in millions of barrels a day†
Sources: Federal Reserve Bank of Dallas (rig count,investment); Energy Department (production)
*Seasonally adjusted; 2020 investment data are estimates †Four-week moving average.million RECESSION 13 million barrels 2008
While oil prices have rebounded in recent days and are above $33 a barrel, U.S. output is still poised to fall because companies aren’t drilling enough wells to make up for production declines from existing wells. Shale wells produce a lot of oil and gas early on, but quickly lose steam. Without investing in new wells, many companies’ output would decline by 30% to 50% in just a year, research firm Wood Mackenzie says.
Shale-oil companies have sharply reduced their drilling budgets for the year, with the top 15 by market capitalization slashing spending by an average of 48%, a Wall Street Journal review of company disclosures found. Forty-six independent U.S. producers planned a combined $38 billion in capital investments this year, the lowest dollar amount since 2004, according to Cowen.
“We believe there’s going to be significantly less capital invested in growth in the U.S.,” said Bill Thomas, chief executive officer of leading shale driller EOG Resources Inc., EOG -1.61% which has reduced its capital budget 46% for the year. It is unlikely U.S. production will reach previrus levels in the next several years, he added.
Since mid-March, operators have idled almost two-thirds of the U.S. rigs that had been drilling for oil, bringing the nation’s oil-rig count to the lowest since July 2009, according to services firm Baker Hughes Co. BKR 5.89% That all but ensures U.S. production is going to fall, even if companies decide to restart existing wells sooner than expected.
WTI in the $30s still leaves North America land with the lowest rig count / frac crew count in 10 years. Customers aren’t going to be reallocating capital spending to ramp back up, even if prices hit $40/bbl. They are in survival mode and need to exhibit capital discipline and profitability to the street. It will likely be 2021 before things slowly pick back up and it won’t look anything like January 2020 levels for years.
Russia and Saudi knew this and were gunning for US shale before corona gave us the official death blow. I’d hunker down , find other employment, and negotiate 20% pay increase in the field because the hours will never be like they were.
It wasn't really a hasty decision. Outsourcing to Accenture was already in the works, this just accelerated the process.
Oil’s Sudden Rebound Is Exposing the Achilles’ Heel of Shale-Rachel Adams-Heard
May 24, 2020, 6:00 AM
Oil prices have surged more than 75% in the U.S. this month. But don’t expect a quick rebound in supply from shale explorers.
The quick turnaround in oil markets is exposing the shale industry’s big weak spot: Lightning-fast production declines. Shale gushers turn to trickles so quickly that explorers must constantly drill new locations to sustain output.
And they haven’t been doing that. Drilling activity touched an all-time U.S. low after Covid-19 lockdowns crushed global energy demand and explorers slashed spending to survive a crash that has erased tens of thousands of jobs and pushed some companies into bankruptcy.
Shale Shortfall
It’s a phenomenon that’s ultimately attributable to the very geology of shale. Just like a shaken bottle of champagne explodes when its cork is popped, a fracked shale-oil well erupts with an initial burst of supply. The froth is short-lived, however, unlike old-fashioned wells in conventional rocks that are characterized by steadier long-term production rates. To offset the decline curve, shale explorers used to keep drilling. And drilling. And drilling.
“We just have no new drilling and these decline curves are going to catch up,” said Mark Rossano, founder and chief executive officer of private-equity firm C6 Capital Holdings LLC. “That hits really fast when you’re not looking at new production. But don’t expect a quick rebound because of oversupply in storage.
Oil Firms Among Worst Hit As Wave Of Bankruptcies Hits Texas
Tsvetana Paraskova - May 25, 2020-CDT
Oil and gas companies, as well as the retail industry, are the worst hit sectors in the COVID-19 pandemic that swept through businesses in Texas, bankruptcy and restructuring lawyers say.
According to data provided exclusively to The Texas Lawbook by Androvett Legal Media research, more than 545 companies of all sectors in Texas filed for Chapter 11 protection from creditors between January 1 and May 5, 2020. This is a surge of 133 percent compared to the same period of 2019, Mark Curriden at The Texas Lawbook writes in Houston Chronicle.
Within Texas, Houston is the center of the wave of bankruptcies, which include many names in the retail and oil industries, according to the data and to bankruptcy partners at law firms.
In April, companies such as Diamond Offshore Drilling and Whiting Petroleum filed for Chapter 11 bankruptcy protection. U.S. shale gas pioneer Chesapeake Energy said in May it was evaluating a Chapter 11 bankruptcy
Oil will be back at $40-$50 a barrel by year end. I’ve been saying this for weeks. But no we won’t rehire. Not until NA Land picks back up which is doubtful anytime soon.