Halliburton: The Oil Market Revival Is Just Around the Corner
2017 is expected be a huge year for Oil Industry. Oil-field service company Halliburton provides a clear note on when drilling will start recovering.
As among the greatest oilfield service firms on the planet, Halliburton Company is one of the world’s biggest oil companies, and has its finger right on the pulse of its customers. That gives it incomparable insight into their strategies, which it can aggregate into a comprehensive view on the future of the petroleum marketplace. Here’s what it sees upwards ahead.
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A wait-and-see strategy
On Halliburton’s recent third quarter conference call, CEO Lesar Dave provided the listeners with the upgraded perspective of the petroleum marketplace of the firm. He began with a reminder:
We remain steadfast in our belief that substantial action increases from our customers begins with sustainable commodity costs over $50 per barrel, which we haven’t seen in any substantive manner yet since the rig count action bottomed out. Operators experienced time to reflect on future drilling strategies, and I believe the restoration will be approached by them with a logical, methodical answer in action according to commodity price fluxes.
What he meant was, while $50 oil is the pivot point for customers to start thinking about employing rigs back to work, they needed to have confidence that petroleum will stay above that level before they ratcheted their capex budgets up to add more rigs.
As Dave noted, while the rig count has begun to increase, producers are disciplined in their approach to ramping tasks. For instance, leading Midland Basin company Pioneer Natural Resources (NYSE:PXD) announced last quarter that it planned to raise its rig count from 12 to 17 during the second half the year. Nevertheless, Pioneer Natural Resources planned to add rigs to its fleet, with it scheduled to add two each and one in September in October and November. That tactic that is slow is because its competitions and Pioneer failed to need to add too many rigs early on in the recovery in case it was another false bottom.
What lies just over the horizon for the industry – Elections and Holidays
Industry will maintain a wait and see strategy till elections, and maybe till holidays. Companies really planning to take a rest from drilling activities during the holidays because the economics of drilling during that time frame are as bad because of the starts and stops. That is because drilling speed is an essential factor in getting well prices down and drilling up yields.Many predict a step come around for early 2017.
Joining it is Pioneer Natural Resources, which intends to deliver 15% compound annual production increase through 2020. In fact, Pioneer can reach that growth rate while remaining cash flow unbiased by 2018 at around $55 oil. Likewise, Canadian driller Encana sees $55 oil fueling long-term sustainable growth. According to its latest five-year prediction, Encana pictures delivering 60% oil increase by 2021. Many other manufacturers are putting out long term production predictions with an aim to restart growth next year provided that oil is above $50, which certainly aligns with Halliburton’s view.
Halliburton continues to consider that once petroleum is sustainably above $50 that companies will begin ramping drilling activities. As rigs are being cautiously brought back by businesses like Pioneer that’s certainly playing out in the rig count. Nevertheless, it will not see a significant ramp-up in tasks until 2017, when firms like EOG Resources plan to begin ramping back up. It appears to imply that 2017 could be a huge year for the sector.
Oil Field Jobs In Texas Are Coming Back
When the industry started slowing down many people were let go from their jobs one by one. It was an ugly time for the oil industry as many companies went under due to debt. The companies that weren’t ready for the slowdown were hit the hardest. The larger companies were able to curb spending and cut costs down just enough to keep them alive. Now that the price of oil is up, operators are eager to make up for lost time.
Oil Companies Are Facing Difficulties In Finding Experienced Oil Workers
Oil companies are faced with huge adversity in finding workers fast enough. The workforce has been uprooted and many have moved away from the industry all together. Many will not even return as they have settled into other careers after being sent home from the oilfield left without a job.
The price of crude oil is recovering faster than anticipated and is going to cause a hiring frenzy in the oil and gas industry. When oil companies are given the green light they won’t waste any time getting back to work. They need workers and they need them quick. The faster you get in, the faster you can work your way up in the industry. Start applying now don’t waste anymore time waiting for a job to come to you. Get out and pound the pavement until somebody hires you. You’ve got to be active and take the initiative. Share this post! Together we can help put everybody back to work! Texas is set to boom, and the oil and gas industry needs you! Share the post, let’s help get this out to everybody so we can get the people of Texas back to work!