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Thread: Oil prices

  1. #126

    Default Re: Oil prices

    I've just been reading this thread over the past few weeks, with nothing more than an outside interest in all things Oklahoma/Economy/Oil. I'm in the technology field, so I cant claim to know anything about the oil business itself. However, one of my best friends is pretty heavily entrenched at one of the "Big 3" here in OKC. Throughout this whole price "slide" process, I have been checking his temperature on the subject. From the get go..his overall response has been that it is troubling...but nothing to lose sleep over. Over the past few weeks however.....his tone has increasingly changed ever so slightly to the negative. Last week, he told me, that there is going to be some "pain" coming. I'm not sure what that term means to him.....but that's what it was. And then just this morning, he texts me out of the blue...and the text is simply.... "Oil: the pain is coming, and its about to get bad...real bad."

    That's REAL out of character for him.

  2. #127

    Default Re: Oil prices

    AGREE, the Governor has taken credit for all the upswing. Lets see if she takes credit for the down-turn.

  3. Default Re: Oil prices

    I think people are underestimating the impact that could occur here. When the support for anything goes away it only makes sense that a certain amount of collapse will occur. The magnitude of the collapse in exponentially proportional to the amount of support that gives way.

  4. #129

    Default Re: Oil prices

    This is really starting to concern me. Prices are now below $60 and still falling. The question is, how much lower is it going to go and how bad will the economic impact be in OKC? I don't think anybody knows the answer. Now is a time locally that is similar to what we saw nationally in late 2007-early 2008 with the banks. Everybody knew a collapse was about to happen but nobody knew what it would look like or whether it would be mild or severe. It ended up being more on the severe side yet it wasn't near as bad as it could have been. OKC seemed to weather that recession and the resulting fall in oil prices to $30/bbl pretty easily. Unemployment here never came close to the levels much of the rest of the country saw.

    While this could mean the end of the boom for the local economy, it's good news for the national economy at large. It's just unfortunate that it's coming now, just as some serious ground was starting to be covered in OKC development. OKC has been dealt some bad hands throughout its history and needs the boom to continue to catch up with the rest of the US.

  5. #130

    Default Re: Oil prices

    Quote Originally Posted by bchris02 View Post
    This is really starting to concern me. Prices are now below $60 and still falling. The question is, how much lower is it going to go and how bad will the economic impact be in OKC? I don't think anybody knows the answer. Now is a time locally that is similar to what we saw nationally in late 2007-early 2008 with the banks. Everybody knew a collapse was about to happen but nobody knew what it would look like or whether it would be mild or severe. It ended up being more on the severe side yet it wasn't near as bad as it could have been. OKC seemed to weather that recession and the resulting fall in oil prices to $30/bbl pretty easily. Unemployment here never came close to the levels much of the rest of the country saw.

    While this could mean the end of the boom for the local economy, it's good news for the national economy at large. It's just unfortunate that it's coming now, just as some serious ground was starting to be covered in OKC development. OKC has been dealt some bad hands throughout its history and needs the boom to continue to catch up with the rest of the US.
    Is it time to press the panic button?

  6. Default Re: Oil prices

    Yes

  7. #132

    Default Re: Oil prices

    Quote Originally Posted by sooner88 View Post
    Is it time to press the panic button?
    You can mock all you want but thinks could potentially be getting very bad in this town within the next year. I hope it doesn't but if oil prices keep falling and don't recover by spring the bottom could fall out of the local economy.

  8. Default Re: Oil prices

    Even in a total oil collapse you won't see anything compared in the 1980's. As was said earlier, that was a bigger banking collapse than anything else.

  9. #134

    Default Re: Oil prices

    Quote Originally Posted by bchris02 View Post
    You can mock all you want but thinks could potentially be getting very bad in this town within the next year. I hope it doesn't but if oil prices keep falling and don't recover by spring the bottom could fall out of the local economy.
    What are you or anyone else going to do about it besides post breathless declarations that the sky is falling?

    Sometimes its best to BREATHE and let these things play themselves out. The people trying to predict this stuff are usually more wrong than they are right.

  10. #135

    Default Re: Oil prices

    Quote Originally Posted by Just the facts View Post
    Even in a total oil collapse you won't see anything compared in the 1980's. As was said earlier, that was a bigger banking collapse than anything else.
    That is one good thing. As long as the oil collapse doesn't trigger a financial crisis, then OKC should be spared the worst. The 1980s saw an oil glut at the same time as a nationwide financial crisis that at the time was the worst since the Great Depression.

  11. #136

    Default Re: Oil prices

    Continental cashed out on their hedges, but that is an anomaly. The reality is a majority of companies have a portion (obviously varied) of their production hedged through at least 2015. If oil stays at sub $60 for a long period of time, for sure we will see an impact on our local economy.... but we have a long way to go before we see that. Saying that we will see "the bottom fall out of our local economy by spring" is asinine.

  12. #137

    Default Re: Oil prices

    Mid to high $40 range by February/March. ZING!

  13. Default Re: Oil prices

    Quote Originally Posted by venture View Post
    What a horrible thing to say and probably furthest from the truth. However, what I would like to know is...what happened to all the "Drill Baby Drill" people that said expanded drilling would bring oil and gas prices down for consumers? Well prices are falling now...isn't that what was being championed before? So what exactly was the motivation to demanding more drilling?

    It is quite apparent that it wasn't for the benefit of consumers and no industry official ever honestly wanted prices to fall.

    I personally don't want a crash, but things need to fall a bit more so we aren't stuck in this economic slump. Who knows, this could be a very good thing for Oklahoma when it comes to diversification. It can allow for others industries to start growing because their costs will go down. Nothing wrong with that at all.
    A couple of things here....Venture, you are probably my favorite contributor on OKCT, and being that I work in the weather business, I have an affinity for what you provide here and on Weather Spotlight. I will, however, say your continued vitriol of the energy industry is a bit frustrating.

    With that being said, economically-speaking, we have already seen what could certainly be considered a "crash" across the industry. A collapse in the value of an underlying asset of nearly 50% in 6 months (WTI) certainly qualifies as such. Not to mention the complete destruction of market valuations of E&P's (see CLR's market cap being reduced some 60% since its high earlier this year and SD's by 75%). This type of decline will have far-reaching impacts, especially in the debt markets, where many producers have leveraged themselves to high-yield bonds they will no longer be able to meet payment obligations on.





    Eventually, this will permeate its way through the economy, as the $15 per tank we all save on gasoline will not be able to make up for the pain felt in the energy and financial sectors as a result. To be rooting for a continued decline in WTI would be akin to rooting for trouble for OKC (and Oklahoma as a whole) and I, for one, am content with paying $2.75/gallon for gasoline if it means I don't have to worry about the local economy and the jobs of many in my area.

  14. #139

    Default Re: Oil prices

    If you would like to see how OKC will fare, watch the economy in Houston. They are more exposed to oil than OKC (OK in general is more of a gas state), and will feel any effect from falling prices a few months before OKC will. They are definitely experiencing a slowdown, although nothing to freak out about, at least not yet:

    Oil Price Crash Will Cause a 10 to 12 Percent Drop in Home Sales in 2015, Houston Association of Realtors Says | Realty News Report

    Houston-Area Sales Show Worst One-Month Drop Since 2009 - 12-10-2014 : Houston Public Media news ... Houston Public Media

  15. #140

    Default Re: Oil prices

    Quote Originally Posted by adaniel View Post
    If you would like to see how OKC will fare, watch the economy in Houston. They are more exposed to oil than OKC (OK in general is more of a gas state), and will feel any effect from falling prices a few months before OKC will. They are definitely experiencing a slowdown, although nothing to freak out about, at least not yet:

    Oil Price Crash Will Cause a 10 to 12 Percent Drop in Home Sales in 2015, Houston Association of Realtors Says | Realty News Report

    Houston-Area Sales Show Worst One-Month Drop Since 2009 - 12-10-2014 : Houston Public Media news ... Houston Public Media
    I wouldn't complain since I'm planning on buying a house this spring. I have a feeling the falling prices would come after I buy though.

  16. Default Re: Oil prices

    Quote Originally Posted by jn1780 View Post
    I wouldn't complain since I'm planning on buying a house this spring. I have a feeling the falling prices would come after I buy though.
    Ha, I'm in the same boat as you, probably the day after we close, we'll find out we could've saved thousands....

    Seriously, though, there's almost nothing any of us average folks can do about this, except maybe save a bunch of money just in case. Sh*t just happens sometimes that you have to get through - for me they were a layoff in IL, a layoff in WA, the recession, and there wasn't a damn thing I could do about any of it, I just had to deal with it...

  17. #142

    Default Re: Oil prices

    Oil is going to get taken to the woodshed until OPEC holds an emergency meeting to cut production or US Shale starts shutting off wells. Is that at $50, $45, $40? Nobody knows. However the market will continue to hammer crude prices until there is substantial movement on the supply side. 1983 isn't going to happen again, the government doesn't allow banks to fail anymore, the consequences are too great. If a bank starts to crater the feds will take it over, stabilize it, and sell it off to someone else.

  18. #143

    Default Re: Oil prices

    Let me just start my saying this is my first post on OKCtalk and I definitely enjoy reading everyone's contributions to the site as it is a valuable resource for everything happening in OKC. People always ask me "how do you know that building is going in there 6 months before it happens" My answer is simple... Go to OKCtalk.com

    Now that I have that out the way... Let's talk Oil Prices. What an interesting time it is for Oklahoma, the country, and the global economy. So much hinges on one commodity price and people underestimate the power it has to change things for everyone. Instead of continuing to ramble on I am going to put this in bullet point format to show you guys what we are looking at here at this very moment...

    Fundamentals for Falling Oil Prices Are In Place:
    -Over Supply of Crude - WHY? Horizontal Drilling in resource plays that were considered uneconomic are now viable at prices north of $45-50 and the American energy companies seized this opportunity unlocking domestic resources like the Eagle Ford Shale (South Texas), Utica Shale (Ohio), Powder River/DJ Basin (WY & CO), and of course Bakken (NORTH DAKOTA). United States has shifted from producing 5.5MM Barrels per day of Oil (Bod) in the mid 2000s to now close to 9MM Bod. That is a dramatic shift in America's appetite for foreign oil.
    -America's Drop in Crude Oil Imported: The United States imported Oil just under 13MM Bod in 2008 now that number has dropped significantly with over a -3MM Bod contraction in U.S. imports in 2013 where we imported 9.8MM Bod. Saudis and many OPEC nations are not happy with this.
    -OPEC Wants Market Share Back: OPEC wants market share back and sees the continual growth of U.S. production as a serious threat to their countries economics. We are talking about nations whose GDP is 90%+ OIL. To put that in perspective it was last estimated the Oil & Natural Gas industry made up roughly 8% of U.S. GDP and we can only assume that number has grown with shale producers exploding in last few years.
    -Prices Have Dropped Rapidly: Which means Oil Traders and Day Traders looking to make a quick buck are going to short the price of Oil down to a level far beyond what is sustainable. I see the price of Oil touch $35 at or near the Bottom of this correction (that is just an educated guess), but I will be buying oil stocks (healthy companies, not your heavy levered ones) if prices touch those levels because we will see a rebound into the $40s and maybe $50s (if we are lucky) in the near term. Guys 3 months from now $50 oil will sound like a relief to the industry... As much as I hate to say that.

    What is the Local Impact to OKC?:
    -Oil Drilling Service Companies Will Get Killed: We are talking about companies such as Baker Hughes, Halliburton, but especially the service companies who are 100% U.S. Shale dependent (i.e. Seventy Seven Energy, NYSE Symbol: SSE). Go check SSE's stock. Down 80% since IPO in June. I have heard from multiple sources layoffs are in the works there unfortunately... WHY? Because Shale Drillers will be cutting a large portion of drilling expenditures going into 1Q & 2Q 2015 which will be a huge hit on these Service companies that will now have equipment sitting in the yard instead of being in the field.
    Shale Drillers Will Weather the Storm: They will simply be cutting back the pursuit of new oil wells and as a result you will see U.S. daily production of Oil level off and potentially decline early 2015 which is what OPEC wants to see (specifically Saudi Arabia). From that point mid 2015 I see a significant rebound in Oil prices to upper $50s/$60s which is very sustainable for the Shale Producers (just not quite as profitable as $100 Oil)
    -OKC Will be OKAY: This is not the 1980s bust. This is simply a cleansing of overproduction in the United States and OKC will see some pain from small companies laying people off and over levered players such as Sandridge. Devon, Chesapeake, Continental, etc. are not going anywhere or putting together some massive layoff plan. Hell Chesapeake had their layoffs last year. They got efficient before this thing cycled down. American Energy Partners you ask? Well I think they will make it through as well. No one in the industry can raise money like Aubrey McClendon even in the crappy times. The guy lives for these moments and OKC is lucky to have him as a job creator and wealth raiser for Oklahoma.

    In summary, Oil prices falling in my opinion is a "Reset" not a "Bust". The pain will be felt for next 6 months. I think by end of next year we see stabilization in the price. The only catalyst I see here is a U.S. economy in general. I mean let's get real, the stock market values are pumped by Quantitative Easing and we are due for a correction within the next 2 years. A U.S. slowdown/recession could further hinder Oil Prices and that is something we all must keep a watchful eye on before we make any assumptions. I am more of an optimist which I think everyone has to get a hold of in times like these. Oil prices will someday rebound because of the simple reason "The world needs energy" and someone has to supply it. We will get to a point where isn't enough crude supplies and then prices will sky rocket again. It happens every time. Everything cycles and I look forward to seizing the opportunities ahead on the flip side of this cycle. GO OKC! WE WILL ENDURE THIS. THE MOMENTUM IS NOT STOPPING HERE.

    DISCLAIMER: I realize this post has many opinions and assumptions many of you may/may not agree with and please comment and/or correct any errors you see above. This is more of a manifesto and journal entry from myself as someone who works directly in the Oil Industry. I felt compelled to share my thoughts with those above on this feed. I look forward to reading this post 6 months from now and seeing where my assumptions were way off.

  19. Default Re: Oil prices

    Quote Originally Posted by TheTravellers View Post
    Ha, I'm in the same boat as you, probably the day after we close, we'll find out we could've saved thousands....
    TheTravellers,
    It might be true that you "could've saved thousands", and, it might not be true, regardless, you will probably have at least five friends tell you how much you could have saved if you hadn't rushed into it!
    C. T.

  20. Default Re: Oil prices

    Quote Originally Posted by s00nr1 View Post
    A couple of things here....Venture, you are probably my favorite contributor on OKCT, and being that I work in the weather business, I have an affinity for what you provide here and on Weather Spotlight. I will, however, say your continued vitriol of the energy industry is a bit frustrating.

    With that being said, economically-speaking, we have already seen what could certainly be considered a "crash" across the industry. A collapse in the value of an underlying asset of nearly 50% in 6 months (WTI) certainly qualifies as such. Not to mention the complete destruction of market valuations of E&P's (see CLR's market cap being reduced some 60% since its high earlier this year and SD's by 75%). This type of decline will have far-reaching impacts, especially in the debt markets, where many producers have leveraged themselves to high-yield bonds they will no longer be able to meet payment obligations on.

    Eventually, this will permeate its way through the economy, as the $15 per tank we all save on gasoline will not be able to make up for the pain felt in the energy and financial sectors as a result. To be rooting for a continued decline in WTI would be akin to rooting for trouble for OKC (and Oklahoma as a whole) and I, for one, am content with paying $2.75/gallon for gasoline if it means I don't have to worry about the local economy and the jobs of many in my area.
    I really don't mean to be frustrating at all. I also don't have any issue with an industry making as much money as possible. The theme in posts has been the beef with the energy industry is the line we were sold about more drilling, opening up more public lands would bring prices down for consumers. Now we are seeing lower prices and the industry is spouting doomsday. They are upset with events unfolding that are almost what they were trying to sell us on with in the last 10 years. That's where my beef is.

    Also keep in mind, the savings may not seem that great here...but look at other areas that were pushing $4+ a gallon or the heavy manufacturing sectors. They will see a nice windfall from this.

    I don't only pick on the oil and gas industry though. I've been very critical about the BS consolidation in the airline industry that has wiped out consumer choice and competition. We've seen the DOJ approve merger after merger saying that a bigger stronger airline will help compete against the other bigger airlines only to lead to each airline getting cozy and not really doing anything. Dozens of smaller cities have completely lost service as airlines contract. Southwest dumped around 20 cities from the AirTran network that were profitable with the AirTran model, but not Southwest.

    I guess you can say my beef is with powerful entities that preach they are going to do one thing and then completely do a 180 when the time arrives to act.

  21. #146

    Default Re: Oil prices

    Quote Originally Posted by sooner88 View Post
    Is it time to press the panic button?
    I don't know.

  22. #147

  23. Default Re: Oil prices

    Unfortunately a bit premature as the selling has resumed:

    Click image for larger version. 

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  24. #149

    Default Re: Oil prices

    The firm that wants to frac Lake Hefner is offering 21% royalties if allowed. But the oilies told our lege if they didn't get to keep their sweetheart 2% deal to extract our state treasure and become billionaires an activist investor would take over the company and move it to Houston. Were they lying?

  25. Default Re: Oil prices

    Quote Originally Posted by Edgar View Post
    The firm that wants to frac Lake Hefner is offering 21% royalties if allowed. But the oilies told our lege if they didn't get to keep their sweetheart 2% deal to extract our state treasure and become billionaires an activist investor would take over the company and move it to Houston. Were they lying?
    As usual...WHAT THE F ARE YOU TALKING ABOUT?

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