Oil prices

[AP]

No, I work water & sewer, not oil.

He "lays the pipe"

[bradh]

He "lays the pipe"

Hey-o! (I'm one step before that, though)

[Dubya61]

Wall St owns too many politicians on both sides. Save Elizabeth Warren no one has the courage to take them on. Our economy has pretty much recovered from the great recession they caused, time to repeal Dodd-Frank, unbridle the Wall St sociopaths and let them gamble again with people's retirements no strings attached.

Should I go see a therapist if I agree with part of something Edgar says?

[bradh]

This seems relative to our discussion from earlier.

Economist: To Protect Frackers, U.S. Should Restrict Oil Imports - Forbes

Pluses and minuses present, but would never happen. Government meddling never ends well typically.

[OkiePoke]

This seems relative to our discussion from earlier.

Economist: To Protect Frackers, U.S. Should Restrict Oil Imports - Forbes

Pluses and minuses present, but would never happen. Government meddling never ends well typically.

Too big to fail?

[bradh]

Too big to fail?

I wouldn't say it's apples to apples, a restriction on oil imports wouldn't be just cutting a check to O&G firms like the auto and bank bailout. It's not intended to be a bailout from failing, but a restriction for hopefully long term stability and avoiding the wild fluctuations the industry is prone to. It would not even things out right away, as you'd initially have a huge spike in prices, then a fall like we have now because of a production glut. Then of course, there is the issue of when we run out...

Like I said, it wasn't posted as an answer, just a discussion piece (wish I had found this last night).

[bradh]

So what are everyone's thoughts on some of the more unstable members of OPEC? It's said that Venezuela can't balance its sheet with $60 oil and really needs it double that to make it worth while. Uprising there could spike prices back up easily.

[pw405]

But you have mentioned you work in the industry.

You keep mentioning some sorta socialist utopia where I (the rest of society) have to pay additional cost to provide jobs to a local industry that refuses to refine processes and lower cost to compete.

O&G Companies fight tooth and nail to reduce costs. Trust me. Lowering your costs per well is the about the #1 focus (safety maybe higher?)

[PhiAlpha]

O&G Companies fight tooth and nail to reduce costs. Trust me. Lowering your costs per well is the about the #1 focus (safety maybe higher?)

Exactly, and it's not like a major company is building a large oil and gas research facility here or anything... I can't imagine an oil and gas research facility doing research to refine processes and improve efficiency...I just can't believe the entire industry is so stubborn in its refusal to help itself be more profitable...

[ylouder]

What I don't get is why these smaller and midsized companies are already trying to sell equipment and firing people left and right. They had year after year of record profit and the business folds because gas prices have been down for a few weeks?

(See link below)

If a business is ran that poorly or the cost are so astronomical to operate in this state, well bye.

[ylouder]

Oil And Gas Companies Sell Unused Equipment During Downturn - News9.com

[Just the facts]

What I don't get is why these smaller and midsized companies are already trying to sell equipment and firing people left and right. They had year after year of record profit and the business folds because gas prices have been down for a few weeks?

(See link below)

If a business is ran that poorly or the cost are so astronomical to operate in this state, well bye.

It is two things: 1) all that supposed growth was fueled by debt. When the inability to service the debt goes away the whole model collapses. This is why I hate the 'growth model' used by almost every American company. 2) Wall Street blood suckers don't give a **** what happened 6 weeks ago. They are only interested in maximizing profit over the next few milliseconds.

[Pete]

What I don't get is why these smaller and midsized companies are already trying to sell equipment and firing people left and right. They had year after year of record profit and the business folds because gas prices have been down for a few weeks?

(See link below)

If a business is ran that poorly or the cost are so astronomical to operate in this state, well bye.

They often are very heavily leveraged and betting on prices staying above a certain point.

When that doesn't happen, the revenue for what they produce can't cover their drilling costs, mineral rights, personnel... So it all gets shut down.


It's why things can collapse pretty quickly in that business. Under Aubrey, Chesapeake was really doing the same thing, just on a much bigger scale.

[bradh]

They aren't all like that, the ones that have solid balance sheets will survive and live to see the end. There is a lot of junk debt out there and what ylouder is talking about is those companies, many being service companies that pop up just trying to get their piece of the pie.

[C_M_25]

Exactly, and it's not like a major company is building a large oil and gas research facility here or anything... I can't imagine an oil and gas research facility doing research to refine processes and improve efficiency...I just can't believe the entire industry is so stubborn in its refusal to help itself be more profitable...

It is very expensive to do as you suggest. Most companies will need to find a research facility, buy equipment, and hire the experts to conduct the analysis. These upfront costs are very high, and it is difficult to keep the staff busy. Most companies rely on academic consortia and partnerships with service companies to answer the tough questions. Trust me. The work is being done to reduce costs and improve technology, but the normal Joe is not likely to ever see the process....just the end results (sometimes).

[PhiAlpha]

What I don't get is why these smaller and midsized companies are already trying to sell equipment and firing people left and right. They had year after year of record profit and the business folds because gas prices have been down for a few weeks?

(See link below)

If a business is ran that poorly or the cost are so astronomical to operate in this state, well bye.

First off, companies aren't "firing" people, they are laying people off...there is a major difference. It also has nothing to do with the price of gas being down a few weeks and everything to do with the price off oil dropping 50% in the last 6 months.

The small and mid-sized companies that are laying people off right now are service companies that have run out of work for their drilling rig and completion crews as well as some land brokerages who's clients have shut their projects down. Especially at smaller service companies, most of those employees are independent contractors. When independent contractors don't have work, they don't get paid. When E&P companies cut their rig counts, if service companies can't find any where else to send their rigs, they don't have work for crews on those rigs and they get laid off until they have work again. If E&P companies are drilling fewer wells, they are also completing fewer wells so those completion crews don't have work either. It's not about being poorly run or not saving money, it's about service companies having their work slashed by their clients and not hemorrhaging money to pay a 90 independent contractors for 9 out of 10 rigs that won't be used for the next year. For service companies, if you aren't making money, you can't pay people. Some service companies are laying off full-time employees as well but they usually try to avoid that as long as they can. They just can't keep people on if they haven't had work for them in a few months and don't plan to have any for the next year.

As I've said before, right now it is the service companies feeling the pain and having to lay people off, not the operators. I haven't heard of anyone getting laid off at an E&P company yet and that shouldn't happen for awhile outside of companies that are just exceptionally poorly run. Chaparral Energy, for example, has been run into the ground over the last few years by a bunch of idiots in it's senior management and are likely going to start cutting back on staff later this year. Sandridge, based on it's stock price alone, also may have some issues if prices don't improve. For the most part E&P companies are just slowing down, drilling whatever wells are profitable at the current prices, and waiting for the price to come back up. E&P companies that are hedged haven't slowed down as much yet. There is not much real panic yet on that side of the business.

As far as companies selling equipment, a large portion of service companies' cash is tied up in their equipment assets, especially at smaller companies. I highly doubt anyone is selling their top shelf equipment right now (like drilling rigs). If service companies are selling equipment, I would imagine it is just extra equipment that had been sitting around unused over the last few months to years that they haven't needed and now makes since to sell with the downturn in prices. Same goes for smaller E&Ps that are selling equipment. Companies are looking for anyway to make money right now and selling equipment they don't need is a quick way to do it. Again it isn't about selling off every piece of equipment they own because the price of oil is down. Now that activity has slowed, companies have more time to assess what they need and what they don't and are getting rid of equipment that they don't need.

[PhiAlpha]

It is very expensive to do as you suggest. Most companies will need to find a research facility, buy equipment, and hire the experts to conduct the analysis. These upfront costs are very high, and it is difficult to keep the staff busy. Most companies rely on academic consortia and partnerships with service companies to answer the tough questions. Trust me. The work is being done to reduce costs and improve technology, but the normal Joe is not likely to ever see the process....just the end results (sometimes).

I was being sarcastic. I was referring to the fact that it's ridiculous to suggest that E&P companies aren't doing everything they can to improve efficiency, lower production costs, and improve profit margin... because I've never seen a company that isn't doing that. I also thought it was funny that the ylouder suggested that the industry isn't doing anything to improve efficiency when GE is building a massive oil and gas research facility here.

[s00nr1]

As I have been saying.....cheaper gas != more spending.

"Behold The "Cheap Gas" Spending Surge: $1 More Per Day"

http://www.zerohedge.com/news/2015-0...ng-increase-ye

[ylouder]

Bingo...customer spending is way up regardless of some of the doom and gloom some locals are spreading over the fall of oil prices.

[PhiAlpha]

As I have been saying.....cheaper gas != more spending.

"Behold The "Cheap Gas" Spending Surge: $1 More Per Day"

Behold The "Cheap Gas" Spending Surge: $1 More Per Day | Zero Hedge

Yes, just not necessarily in major producing states, which to be honest, is all I care about when OK is included in that list.

[jn1780]

Bingo...customer spending is way up regardless of some of the doom and gloom some locals are spreading over the fall of oil prices.

Do you actually read the article? On a national level, consumer spending is basically the same as it was last year. Although this probably shows that some states are up and some states are down.

[ylouder]

Take off my internet hat for a moment.

The thing that has bothered me about this whole deal is how blinded some of the locals are to problems the rest of us see. We get it, oil and gas creates jobs, but by their very nature the vast majority of these jobs are temporary work that has a lot of bad side effects.

-Oil and Gas industry has literally written laws and tax codes for itself, we all as citizens are getting screwed. Now that the boom is ending, what do we have to show for ourselves besides crappy roads, crappy schools, and now damage to our homes?

-Earthquakes, we are now having more seismic activity than California; which is on the freaking ring of fire.

-Everyone knows the cause of the earthquakes and most of us have read the studies, but collectively we still act like its undecided because of the 'jobs'.

Now this nonstop complaining about how we all need to rise up and pay more for fuel to keep otherwise uneconomic wells in this state producing is asinine.

In real life I'm the farthest thing from an environmentalist, I'm just pissed off because I've repaired drywall damage at our previous home and now our new construction. I've had to buy earthquake insurance, I've had to install a reverse osmosis system on our well water (drinking only) incase our water gets contaminated, ive had to deal with crappy false inflation of home values (our builder now has our same model listed for 30k more than we paid about 1.5 years ago), and now the coming massive decline in property value.

So if someone wants to complain about drilling slowing down in our state and cheap oil that only cost 5 dollars a barrel to produce on the other side of the world (that wont cause me earthquakes, inflation, or worry about my well becoming contaminated….and lowers the price of gas ) then cry me a river because I really don’t care.

[OKCisOK4me]

You need me to call the whammmmmmmbulance for you? Geesh...

As a matter of fact, just go ahead and move to Dodge City, Kansas, which is kinda how OKC would be if your world was invoked cause you can forget about the Thunder and millinials sticking around to better improve this city.

Don't talk about cry me a river...

[ylouder]

Good one.

[PhiAlpha]

Take off my internet hat for a moment.

The thing that has bothered me about this whole deal is how blinded some of the locals are to problems the rest of us see. We get it, oil and gas creates jobs, but by their very nature the vast majority of these jobs are temporary work that has a lot of bad side effects.

-Oil and Gas industry has literally written laws and tax codes for itself, we all as citizens are getting screwed. Now that the boom is ending, what do we have to show for ourselves besides crappy roads, crappy schools, and now damage to our homes?

-Earthquakes, we are now having more seismic activity than California; which is on the freaking ring of fire.

-Everyone knows the cause of the earthquakes and most of us have read the studies, but collectively we still act like its undecided because of the 'jobs'.

Now this nonstop complaining about how we all need to rise up and pay more for fuel to keep otherwise uneconomic wells in this state producing is asinine.

In real life I'm the farthest thing from an environmentalist, I'm just pissed off because I've repaired drywall damage at our previous home and now our new construction. I've had to buy earthquake insurance, I've had to install a reverse osmosis system on our well water (drinking only) incase our water gets contaminated, ive had to deal with crappy false inflation of home values (our builder now has our same model listed for 30k more than we paid about 1.5 years ago), and now the coming massive decline in property value.

So if someone wants to complain about drilling slowing down in our state and cheap oil that only cost 5 dollars a barrel to produce on the other side of the world (that wont cause me earthquakes, inflation, or worry about my well becoming contaminated….and lowers the price of gas ) then cry me a river because I really don’t care.

It sounds like you should ride that whambulance to another part of the country where these issues wouldn't be such a burden to you...