Thread regarding Chevron Corp. layoffs

@1htjv, I concur with your analysis and opinion. As for your Opinion #6, I'll say oil prices won't shoot up for at least 10 years.

IMHO,

1. Those nations that are pumping now will continue pumping at full rates. This is because most of the oil producing nations are not diversified economically and can't satisfy their creditors without pumping oil. When the price of oil is down, they therefore have to pump more just to maintain.

2. Market share is increasing in the middle east over the rest of the world. This in itself can keep the price of oil down (particularly as world production is increased) as production costs are relatively low.

3. While Iran will probably only add 1/2 million bbls/ year. They should be able to do that for many years until they reach 3-4 million of bbls/ day. This will flood the market, keeping prices (and profit margins) down for a long time.

4. After Iran comes on line with it's new production and prices start to increase, the US shale oil drilling will start up again at approximately $70/ bbl. Production is now falling in these wells but slower than anticipated. There are many also wells that are drilled and then capped. Effectively they are playing the commodities (in ground storage) game with these wells. These wells and new ones will effectively govern any further upward oil price increases worldwide for several additional years as the shale oil production totals almost 5 million bbls/day. All this in just 5-7 years after the fracking technology became common use and shale oil production has the potential to increase. The US shale oil market has the potential to come on line fast when the economics are favorable (like over $70/ bbl). There's also shale oil potential in other countries that could be developed as prices increased over $70/ bbl. All this will moderate and delay the eventual up swing in oil prices.

5. Demand for cheap oil will eventually increase its usage. But for now it's a supply curve driven model and oil is in the $30/ bbl range. Even if oil goes down to $20/ bbl, the demand won't change much. The demand for crude is some what inelastic over the short term.

6. When people get used to depending on cheap oil and after Iran and the rest of the middle east get their increased production (market share) and the worlds oil wells that are pumping now at full rates start to deplete and the best plays in the US shale oil are drilled up. Then the supply and demand curves will intersect sharply and prices will shoot up. But that won't happen in just a couple of years.

An additional capex and opex cut to what was previously announced?

Given today's (Nov 12th) announcement that Chevron will continue to cut opex and capex,... things do, indeed, look pretty grim for 2016. Oh! Before I forget,... Happy Thanksgiving, everyone!

DWEP will take a hit too when those BUs are combined. Not a good time to be opex in either of those BUs.

If you are in GOMBU 2016 not good. Over 50% of BU will be layed off. Done deal but leadership team doesn't have the balls to make the announcement. Cutting the reservoir management lead, MH, some slack on this one.

Word of advice to those lucky enough to not be laid off yet... Save as much of your your money as possible, pay off your debts quickly, refinance the mortgage (while still employed) before rates go higher, and pay more toward principal each month. Make sure you have cash in the bank for at least 9 months of expenses. Getting laid off is stressful enough. Having burdensome debts on top of that is enough to fall into a deep state of depression. I wish that on no one.

Get ready for some serious pain in 2016 for those that are left. Don't delude yourself into thinking that being a "good employee" will save you.

Not sure why the predictions for continued low crude prices. If anything, chances for a more robust recovery seem better than originally believed. China's economy, while not exhibiting the growth, expected, is still forecast to grow in the range of 3.5%. The Saudis, even though stubbornly holding to their production rates, are known to be burning into their cash reserves and have incurred debt (for the first time since???), as well. But, the thing that may have the most significant sway on crude pricing, in the near (and long) term, is what's going on in Syria. Assad may be the happy recipient of Russian (and Iranian) support, but I suspect the real purpose for Russia's presence is Putin's desire to become THE hegemonic force in the region. To the extent Iran and Russia can manipulate/control M.E. production, I would expect Putin would favor much higher crude prices, as so much of Russia's income depends upon it. The Dec 4th OPEC gathering might be interesting, but I continue to view Russia's presence in the region the most significant factor influencing where crude prices are headed.

Carnak is absolutely right. I don't like this at all, but I follow the O&G industry very closely. I'm also a realist.

2016 will be just as bad as 2015. Most of the big cuts in within the oil exploration companies happened later in the year and are still happening. Marathon announced today that they are selling almost all of their GOM assets and laying off over 200 people as a result. For 2016, the entire year will be stuck between 42-52 dollars/barrel, give or take a little, not just 1/2 to 2/3 of the year (2015). This is red money (loss) and every month the price stays below $60, will mean that more assets will be sold and more people will be laid off. I have been in this business a long time, and don't kid yourself thinking the worst is over. You will be surprised at how many people an oil company can lay off and still be able to function and pay it's dividend. Chevron still has a lot of bloat and no one is safe.

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