Yes, but it bounced off of that quickly, and has recovered to $83, which was a nice sign. I'm thinking we won't see quite as much volatility as the past two weeks until mid term elections results are clear, but I've been very wrong before.

Interesting graph from Woodmac. Seems most companies can make due at $80/bbl with some cuts to exploration budget but at $60/bbl to $70/bbl things would get pretty ugly.

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Interesting graph from Woodmac. Seems most companies can make due at $80/bbl with some cuts to exploration budget but at $60/bbl to $70/bbl things would get pretty ugly.

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Pretty much what I have heard too from my friends in the industry.

Unless I reading it wrong, seems like things will get real ugly before that if your not making any profits...

I have a safe and stable job and no matter what happens to the economy I really have no worries about losing my job. With that being said, I have been here just over 3 yrs out of school which means falling behind on the pay scale. A move is necessary to get me back in line with some of my peers who have already made moves. I am not an engineer, so on the non-technical, business side of things. My past 3 years have been in a finance/strategy/planning role.

Being in Houston, the majority of jobs I am looking at and targeting are working for O&G companies, many of whom are listed on the chart referenced a couple posts above. I am mid-20's, married and have a 1 yr old daughter, hope to knock the wife up again in the next yr or less, so job stability is important but so is making more money.

How hesitant should I be or not be to make a move right now?

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I have a safe and stable job and no matter what happens to the economy I really have no worries about losing my job. With that being said, I have been here just over 3 yrs out of school which means falling behind on the pay scale. A move is necessary to get me back in line with some of my peers who have already made moves. I am not an engineer, so on the non-technical, business side of things. My past 3 years have been in a finance/strategy/planning role.

Being in Houston, the majority of jobs I am looking at and targeting are working for O&G companies, many of whom are listed on the chart referenced a couple posts above. I am mid-20's, married and have a 1 yr old daughter, hope to knock the wife up again in the next yr or less, so job stability is important but so is making more money.

How hesitant should I be or not be to make a move right now?

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Normally I'd say nothing ventured nothing gained, but right now I'd stay put, when oil gets above 90 and the futures are healthy, then maybe you jump.

I keep seeing a recurring theme in this thread, the thought there is going to be a wave of retirees over the next 5 years. Do I think guys are going to exit the industry? Yep, but it's going to be when they are senile or forced out. A lot of these guys can't afford to retire.

A reversal on the crude export ban would crush the domestic refining/petrochemical industry.

A lot of older guys working for the majors are going to start retiring if/when interest rates start to increase because, from what I've heard talking to them, they are mostly all going to elect to take their pension as a lump sum and the decrease in that lump sum value due to higher interest rates will push them into making the decision to retire.

POW I'm curious about your comment that no matter what happens to the economy you don't think your job is in jeopardy. I'm 57 so I've seen more than you, but I think in certain times everyone's job is in jeopardy.

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A lot of older guys working for the majors are going to start retiring if/when interest rates start to increase because, from what I've heard talking to them, they are mostly all going to elect to take their pension as a lump sum and the decrease in that lump sum value due to higher interest rates will push them into making the decision to retire.

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I was under the impression the ability to cash out a pension at the majors was an unusual benefit. Is that with a traditional pension or a cash balance pension?

The reason I ask is I have the choice of pension, and if I choose the cash out plan it pays significantly less that if I choose the traditional pension

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POW I'm curious about your comment that no matter what happens to the economy you don't think your job is in jeopardy. I'm 57 so I've seen more than you, but I think in certain times everyone's job is in jeopardy.

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I'm guessing youthful exuberance?

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I keep seeing a recurring theme in this thread, the thought there is going to be a wave of retirees over the next 5 years. Do I think guys are going to exit the industry? Yep, but it's going to be when they are senile or forced out. A lot of these guys can't afford to retire.

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Most of the older guys have been through numerous busts and have lost their retirements numerous times. Many of them have adjusted how they save, not all, but many I've spoken with. And I can't imagine they are the only ones doing so. And why do I think they retire? Pretty much every old oilfield guy I've worked with has come out and said, one more bust and I'm done.

That won't be true for every guy over 55, but I know both field and office folks that feel that way. There will be some who work till they are senile, but I don't think that will be the norm for most. Who knows though

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A lot of older guys working for the majors are going to start retiring if/when interest rates start to increase because, from what I've heard talking to them, they are mostly all going to elect to take their pension as a lump sum and the decrease in that lump sum value due to higher interest rates will push them into making the decision to retire.

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I was under the impression the ability to cash out a pension at the majors was an unusual benefit. Is that with a traditional pension or a cash balance pension?

The reason I ask is I have the choice of pension, and if I choose the cash out plan it pays significantly less that if I choose the traditional pension

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Sounds like the Shell Pension plan?

I know Chevron and Exxon have traditional pensions with the base benefit stated as a monthly payment (actually I think CVX now states the base benefit as a lump sum % of final average salary), but it can be converted to a lump sum. The lump sum value varies based on interest rates.

The info on their pension benefits is available on their websites and in their annual reports.

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POW I'm curious about your comment that no matter what happens to the economy you don't think your job is in jeopardy. I'm 57 so I've seen more than you, but I think in certain times everyone's job is in jeopardy.

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JJA, that was an ignorant comment on my part. What I mean though is job stability here is definitely high & the group I work in is small & well-valued. There would be a handful of people/groups that would get slashed before ours. If the O&G industry takes a hit, even a big hit, it would definitely impact us but we are not strictly dependent on O&G and would be alright. Even through the recent 'great recession' my team members tell me they weren't ever worried.

Stockpiles climbed 7.11 million barrels in the week ended Oct. 17, the EIA said in a weekly report. Analysts surveyed by Bloomberg had expected a gain of 3 million.

This is probably an uninformed opinion but don't the Saudis have reason to let prices go lower right now? The region is unstable and much of that instability is being financed by oil resources. Iran comes to mind.

The Saudis also know that fracking and new , but very expensive, deep water plays are the greatest threat to their market share. They are the kings of cheap oil and will be willing to let prices fall below the threshold , around $75-80bbl, to severly dampen the growth of the expensive alts to their crude. So far that strategy seems to be developing and WILL work.

I thought Saudi announced yesterday that they are slowing production.

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This is probably an uninformed opinion but don't the Saudis have reason to let prices go lower right now? The region is unstable and much of that instability is being financed by oil resources. Iran comes to mind.

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They do. And they can handle lower prices better than other OPEC countries. But their government budget still depends on oil prices, and they can't tolerate low prices for long.

They can't handle lower prices so they will lower their output to make more money? You do realize that sounds pretty silly right? Before, this may have worked because there weren't many alternatives to close the gap. If they lower their output, we will close the gap eventually and push prices down again. Their only choice is to eliminate us.

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They can't handle lower prices so they will lower their output to make more money? You do realize that sounds pretty silly right? Before, this may have worked because there weren't many alternatives to close the gap. If they lower their output, we will close the gap eventually and push prices down again. Their only choice is to eliminate us.

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If we weren't already the #2 producer and didn't already have all the deep water projects funded that will come on line over the next 10 years it might work. However, I think they waited too long to make this an effective play. Throw in all the Africa deep water projects already funded and controlled by the majors that will come online over the next 10 years and the Saudis will soon realize their ability to manipulate the market isn't what it used to be.

Surface plays may take a hit, but cat is out of the bag on deep water. The majors are already pot committed on most named projects.

Edit 3-31-15. Looks like I was partially right so far (deep water) and really wrong as far as Saudi controlling the market price due to their cheap production costs.

Interesting opinion piece in the WSJ about how fracking will survive cheap oil.

http://online.wsj.com/articles/mark-p-mills-the-oil-price-swoon-wont-stop-the-shale-boom-1414106473

He says shale started when oil was under $50. There's always been a spread between WTI & North Sea prices. Fracking is getting ever more efficient, thus profitable even at cheap per barrel prices. Finally, entrepreneurs are going to pioneer new finds and continue chasing profits.

Everyone is a price taker now, for the first time since "Pennsylvania Rock Oil". The Saudis and opec have very little long term ability to control prices at this point.

http://www.houstonchronicle.com/business/energy/article/Black-gold-loses-some-glitter-at-80-5846386.php?cmpid=email-premium&t=968e22187e81750c0d#/0

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But smaller operators with more lopsided balance sheets face more uncertainty and tougher decisions:

Continue drilling and let their balance sheets suffer or pump the brakes and watch production growth fall.

And pinched in between are the oil field services companies, which will bear the brunt of the slump when operators pull back on work or start demanding concessions to loosen up tight margins, said Steven Wood of Moody's Investors Service

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This WSJ article today made me think this is more of a buying opportunity than a falling sky....

http://online.wsj.com/articles/energy-boom-can-withstand-steeper-oil-price-drop-1414627471

Might be behind a paywall for some.

Crossbow, does the article give any more information in the disclaimer at the bottom? Or does it give info in all drilling? Selectively noting the higher profitability wells seems a little off when talking about the industry. Not everybody is going to be lucky enough to have high oil content wells on the shale plays, no?

i think the number is closer to $75 or $80 for eagleford, atleast what I have heard from a friend

I've heard around $65 for the most part in EF.

I have a wsj subscription. I'll copy and paste the article here in a bit.

Break even isn't the question. Where you stop drilling is the question. Best part of EF could probably keep going at $40. Poorer parts of oil window to southwest probably need closer to $80. A lot of variation.

^ bingo

play-wide break even/operation cessation is different than area by area. Who is operating makes a big difference also.

Energy Boom Can Withstand Steeper Oil-Price Drop Some Smaller U.S. Producers Are Likely to Face Pinch From a More-Modest Decline

Oil prices would need to fall at least another $20 a barrel to choke off the U.S. energy boom, industry experts say, though some smaller American producers would face serious problems from a more modest decline.
Small and midsize companiesnot global giantsare behind the surge in U.S. oil output, which hit 8.97 million barrels a day earlier this month, according to federal statistics. Some of these drillers have taken on a lot of debt, which was easier to justify when oil was going for as much as $107 a barrel just four months ago.

U.S. crude closed Wednesday at $82.20 a barrel, and far less in some parts of the country where few pipelines are available to move it to refineries. Lower oil prices mean drillers will have less cash to cover their borrowings, especially if crude prices tumble more.So far, American companies haven't reacted to the recent oil-price drop: The number of drilling rigs searching for onshore oil in the U.S. has risen slightly since oil prices peaked June 20.
The Organization of the Petroleum Exporting Countries seems to be betting that will change soon. Abdalla Salem el-Badri, OPEC's secretary general, predicted Wednesday that if current prices hold, half of the U.S. oil that is fracked from shale formations will be uneconomic, leading companies to stop producing it.

That view is at odds with most U.S. forecasters, who say output can remain steady at current prices because companies have cut their costs by finding ways to produce oil more efficiently. For example, the amount of oil coming from each new well in South Texas has nearly doubled since 2012, federal data show.
Marianne Kah, chief economist of ConocoPhillips , said oil prices would need to fall to $50 a barrel "to really harm oil production" in U.S. shale basins. She said 80% of the American shale sectorin which ConocoPhillips is a major operatoris profitable at prices between $40 and $80 a barrel for benchmark West Texas Intermediate crude.
Jason Bordoff, director of Columbia University's Center on Global Energy Policy, said he believed prices would have to fall much further to put significant pressure on the U.S. energy boom. "I am not sure if $80 is enough," he said. "You might need $60 or $65 to really see a stress test."

Occidental Petroleum Corp. 's chief executive said last week that he saw plenty of drilling opportunities in the Permian Basin in West Texas at current prices. "We think there's a lot of economic oil at $75," Steve Chazen said on a call with analysts. "Do I think there's a lot of economic oil at $50? No, I don't." The Permian, where U.S. drilling activity is heaviest, will be profitable for companies to drill at U.S. oil prices of $57 to $75 a barrel, depending on location, according to research from Robert W. Baird & Co. As a result, companies active there, such as Chevron Corp. , Apache Corp. and Pioneer Natural Resources Co. , are likely to keep drilling.
The Eagle Ford Shale, located farther south in Texas and home to Marathon Oil Corp. , Anadarko Petroleum Corp. and EOG Resources Inc., would remain economic at even lower prices$53 to $65, according to Baird. North Dakota's Bakken Shale, which is the focus of companies including Continental Resources Inc., Whiting Petroleum Corp. and Hess Corp. , comes in at $61 to $75 a barrel.
To be sure, even small price drops could begin to affect production around the margins. "The clear losers in a low-price environment are going to be smaller companies that are overleveraged," said Daniel Katzenberg, a Baird analyst. The downturn will be particularly tough on companies drilling in areas without much history of oil production. Costs tend to be high in these areas, which include the Tuscaloosa Marine Shale in Louisiana and Mississippi and some relatively unexplored shale formations in Oklahoma

Wall Street already is trying to sort out survivors from likely losers. Among the latter is Goodrich Petroleum Corp. , a relatively small Houston company whose shares have plunged nearly 70% since oil prices began falling in June. The New York Stock Exchange Energy Index has fallen 16% over the same stretch.

The company's problems? Most of the wells it drills are in the Tuscaloosa Shale, where the industry hasn't drilled enough to lower costs or improve efficiency. Making matters worse, Goodrich has burned through almost all of the $49.2 million it had on hand at the end of 2013, and its debt compared with its cash flow is higher than normal for U.S. oil and gas companies.
Goodrich didn't respond to requests for comment.
The current price environment is a bit like a stress test to determine which companies have their financial and operating houses in order. Those that spent too much to lease property to drill, or have high operating costs, are most likely to suffer.
"If you didn't overpay for acreage, you will get by just fine," said Ken Morgan, director of the TCU Energy Institute at Texas Christian University in Fort Worth. "But if you paid an arm and a leg to get in the game, banking on $95 oil, there could be trouble and significant belt-tightening ahead."
Even so, companies have strong incentives not to dial back on drilling. They are likely to be reluctant to let go of their well-site crews after training them to operate efficiently.
And nobody wants to be the first to cut production, a move that would help competitors. "If you think it's hard to get 12 OPEC nations to act in concert, try getting thousands of independent operators to agree to react to lower oil prices," said R.T. Dukes, a senior analyst at Wood Mackenzie.

Many companies have hedged their oil production, ensuring a good price for part of it. And energy producers' debt typically isn't due for several years.
"They have clear sailing for 2015, but beyond that and I think many of them could be hurting," said Robert Hefner III, founder and owner of GHK Co., an Oklahoma City energy company.
Noble Energy Inc. executives told investors earlier this week that the company would revisit its spending plans if oil prices continued to fall. But the Houston company said it had hedged its output to protect itself from price swings. Noble, which has a stock-market value of about $21 billion, also drills offshore, so it can shift production in pursuit of the highest returns, an option many shale-focused drillers don't have.
"We're going to be sensitive to our balance sheet," said Noble CEO David L. Stover.
The first pinch could be felt by oilfield-service providers, as producers seek to reduce their costs for services such as drilling and fracking. Halliburton Co. , which helps oil companies drill their wells, has significant exposure to the U.S. shale boom; its stock has fallen 23% since late June.
Dave Lesar, the company's chairman and CEO, said on a conference call last week that Halliburton hasn't detected any slowdown by its U.S. customers heading into 2015.

WTI @ $79 and falling