Oil and Gas After COVID-19

[James Regan + 1,776]

If you can spare 16-18 minutes of your time and actually are involved in the O&G Industry you may find this piece interesting, covers all sectors.

Lots of work to be done, so its time to "put your big boy pants on" and get a grip of your spending and lending and borrowing, as only the smart will make it in the next three years.

Good Luck and try to spend the time to read it you may learn something that has been preached for the last few years.

https://www.mckinsey.com/industries/oil-and-gas/our-insights/oil-and-gas-after-covid-19-the-day-of-reckoning-or-a-new-age-of-opportunity#

Edited May 25, 2020 by James Regan

[El Nikko + 2,145]

My feeling is that geopolitics will be a big factor in oil prices as the world becomes increasingly more unstable, there are still conflicts which could easily flare up exacerbated by the financial pain and the US potential withdrawing from some regions. The fact OPEC+, US shale and the majors all cut production ( and some cut CAPEX) could mean a crunch later down the line.

Yes the next year is going to be very painful but oil companies & NOCs have a tendency to overreact, for example in 2009 oil breifly touched around $26 and ARAMCO (and many other oil companies) made massive cuts to their drilling budget which in turn caused the service companies to lay off tens of thousands of workers but by the time those layoffs were taking effect oil prices had already recovered.

That supermarket job isn't looking too shabby now though

Edited May 25, 2020 by El Nikko

[Dan Warnick + 6,100]

12 hours ago, El Nikko said:

My feeling is that geopolitics will be a big factor in oil prices as the world becomes increasingly more unstable, there are still conflicts which could easily flare up exacerbated by the financial pain and the US potential withdrawing from some regions. The fact OPEC+, US shale and the majors all cut production ( and some cut CAPEX) could mean a crunch later down the line.

Yes the next year is going to be very painful but oil companies & NOCs have a tendency to overreact, for example in 2009 oil breifly touched around $26 and ARAMCO (and many other oil companies) made massive cuts to their drilling budget which in turn caused the service companies to lay off tens of thousands of workers but by the time those layoffs were taking effect oil prices had already recovered.

That supermarket job isn't looking too shabby now though

The way the supermarket workers have been exploited and put into harms way these last few months, they should receive hazard pay.  Seriously!

[Tom Kirkman + 8,860]

22 hours ago, James Regan said:

If you can spare 16-18 minutes of your time and actually are involved in the O&G Industry you may find this piece interesting, covers all sectors.

Lots of work to be done, so its time to "put your big boy pants on" and get a grip of your spending and lending and borrowing, as only the smart will make it in the next three years.

Good Luck and try to spend the time to read it you may learn something that has been preached for the last few years.

https://www.mckinsey.com/industries/oil-and-gas/our-insights/oil-and-gas-after-covid-19-the-day-of-reckoning-or-a-new-age-of-opportunity#

 

Thanks James, good read.

PDF of the article attached:

Oil-and-gas-after-COVID-19-v3.pdf

 

[Dan Clemmensen + 1,011]

That paper seems to me to be mostly buzz-phrases and fluff, making obvious points that appear insightful, but I'm not sure. Maybe they're not obvious. Still, it's useful to see all of this in one place.

There was one sentence that did stand out and that I think the guys on this forum can address:
   "In the shale patch alone, we estimate that economies of skill and scale, coupled with new ways of working,
    could further reduce costs by  up to $10/bbl, lowering shale’s breakeven point and improving supply resilience."

Does this actually make sense? is there really that much left to be gained after the dramatic gains since 2014?

[El Nikko + 2,145]

1 hour ago, Dan Clemmensen said:

That paper seems to me to be mostly buzz-phrases and fluff, making obvious points that appear insightful, but I'm not sure. Maybe they're not obvious. Still, it's useful to see all of this in one place.

There was one sentence that did stand out and that I think the guys on this forum can address:
   "In the shale patch alone, we estimate that economies of skill and scale, coupled with new ways of working,
    could further reduce costs by  up to $10/bbl, lowering shale’s breakeven point and improving supply resilience."

Does this actually make sense? is there really that much left to be gained after the dramatic gains since 2014?

The best rock has already been drilled, what is left is going to be harder to get to and more challenging to produce from. As usual they will try to cut the costs from service companies (already gutted) and wages (already at supermarket levels).

The glory days of pre-2014 shale are totally finished but that doesn't mean shale itself finished, it just means shale will be like any other oil resource...worth drilling with the right prices.