Ouch.
Houston..we have a problem....
7,318,162 Views |
28750 Replies |
Last: 3 days ago by Bibendum 86
seems pretty good.Essentially 1.5 years to collect and wait for better market.
Agreed, doesn't seem to bad. I know of a bunch of folks who gladly asked for the package.
They had a month or two to say they were interested in taking a package and many took them up on it.
They had a month or two to say they were interested in taking a package and many took them up on it.
Only if you've been there for 16 years. The avg stint is 5 years (generally) so that's not good.
Cyp0111 said:
seems pretty good.Essentially 1.5 years to collect and wait for better market.
May want to look at that again. A month of severance for every year of employment. I've been at my current company for 2.5 years, so I'd get 2.5 months of severance. At least it's something, but it's not good.
Where would you get more than that?
Company I got laid off from changed their severance package from a month for every year, rounded up, plus unused pto to 2 weeks for every full year (not rounded up) and no payout for pto. They made this change a couple weeks before mass layoffs.
agdaddy04 said:
Where would you get more than that?
PXD just announced 19 months severance for their non-voluntary layoffs + medical + RSU vesting. Not dependent on years of service as far as I know.
If you don't think that's good then your expectations haven't changed through last two downturns. A week per year of service plus unused PTO is what we are seeing on the service side. These last six months have seen a lot of "week for every year only for employees over X years" changes too.
It continues to amaze me how E&Ps will continue to ask services to bleed themselves dry on pricing while maintaining exact same quality of service delivery. All this while exhibiting the same excessive mentality in regards to their costs.
I am not saying that's you, and frankly I don't know you so don't take this as a personal attack. Just more making the commentary that the mentality of lavish spending on E&P side is not changing to the market.
It continues to amaze me how E&Ps will continue to ask services to bleed themselves dry on pricing while maintaining exact same quality of service delivery. All this while exhibiting the same excessive mentality in regards to their costs.
I am not saying that's you, and frankly I don't know you so don't take this as a personal attack. Just more making the commentary that the mentality of lavish spending on E&P side is not changing to the market.
That is an absolutely fantastic offer.
The BP offer wasnt meant for the 2-5 year employee. It was meant to push the higher tenor guys with 15-20 years. Does not make any of it easier.
The BP offer wasnt meant for the 2-5 year employee. It was meant to push the higher tenor guys with 15-20 years. Does not make any of it easier.
Lester Freamon said:
If you don't think that's good then your expectations haven't changed through last two downturns. A week per year of service plus unused PTO is what we are seeing on the service side. These last six months have seen a lot of "week for every year only for employees over X years" changes too.
It continues to amaze me how E&Ps will continue to ask services to bleed themselves dry on pricing while maintaining exact same quality of service delivery. All this while exhibiting the same excessive mentality in regards to their costs.
I am not saying that's you, and frankly I don't know you so don't take this as a personal attack. Just more making the commentary that the mentality of lavish spending on E&P side is not changing to the market.
I know you're not talking to me but I was the one that thought it to be a weak severance. That being said, I started on the service side. I've worked for the field engineers, service managers and company men. I've been on the operator side now for over 15 years.
I hear you. Operators want it cheaper, faster and done right. But I don't know if their spending is lavish.
Like I told my last service company boss, who walked into my office when I was an operations engineer and told me "prices go up, you guys should share that with us".....:-> you don't worry about how I run my business. You give me your best price for the service you can, while still being fair to you and your bosses, and the market will dictate if you get the work or not. Now that being said, I'd allow him to win a tie.
Comeby! said:Lester Freamon said:
If you don't think that's good then your expectations haven't changed through last two downturns. A week per year of service plus unused PTO is what we are seeing on the service side. These last six months have seen a lot of "week for every year only for employees over X years" changes too.
It continues to amaze me how E&Ps will continue to ask services to bleed themselves dry on pricing while maintaining exact same quality of service delivery. All this while exhibiting the same excessive mentality in regards to their costs.
I am not saying that's you, and frankly I don't know you so don't take this as a personal attack. Just more making the commentary that the mentality of lavish spending on E&P side is not changing to the market.
I know you're not talking to me but I was the one that thought it to be a weak severance. That being said, I started on the service side. I've worked for the field engineers, service managers and company men. I've been on the operator side now for over 15 years.
I hear you. Operators want it cheaper, faster and done right. But I don't know if their spending is lavish.
Like I told my last service company boss, who walked into my office when I was an operations engineer and told me "prices go up, you guys should share that with us".....:-> you don't worry about how I run my business. You give me your best price for the service you can, while still being fair to you and your bosses, and the market will dictate if you get the work or not. Now that being said, I'd allow him to win a tie.
Not on the service side anymore, but service isn't a commodity. Not in this space. Winning a tie makes it sound like it is price first and foremost with quality somewhere down the line. Tough business to be in.
I think you missed the posters point though. Squeezing a service company on price but turning around and offering lavish severance comparatively doesn't really exhibit a "we learned from the last downturn" mentality.
I think O&G has much higher expectations about severance compared to most industries.
Ragoo said:Comeby! said:Lester Freamon said:
If you don't think that's good then your expectations haven't changed through last two downturns. A week per year of service plus unused PTO is what we are seeing on the service side. These last six months have seen a lot of "week for every year only for employees over X years" changes too.
It continues to amaze me how E&Ps will continue to ask services to bleed themselves dry on pricing while maintaining exact same quality of service delivery. All this while exhibiting the same excessive mentality in regards to their costs.
I am not saying that's you, and frankly I don't know you so don't take this as a personal attack. Just more making the commentary that the mentality of lavish spending on E&P side is not changing to the market.
I know you're not talking to me but I was the one that thought it to be a weak severance. That being said, I started on the service side. I've worked for the field engineers, service managers and company men. I've been on the operator side now for over 15 years.
I hear you. Operators want it cheaper, faster and done right. But I don't know if their spending is lavish.
Like I told my last service company boss, who walked into my office when I was an operations engineer and told me "prices go up, you guys should share that with us".....:-> you don't worry about how I run my business. You give me your best price for the service you can, while still being fair to you and your bosses, and the market will dictate if you get the work or not. Now that being said, I'd allow him to win a tie.
Not on the service side anymore, but service isn't a commodity. Not in this space. Winning a tie makes it sound like it is price first and foremost with quality somewhere down the line. Tough business to be in.
I think you missed the posters point though. Squeezing a service company on price but turning around and offering lavish severance comparatively doesn't really exhibit a "we learned from the last downturn" mentality.
I'm not sure paying a decent severance should be seen as lavish spending and not learning from previous downturns. I mean, operators are letting people go too. Lavish spending would be continuing to keep everyone onboard through a downturn at 100% pay.
That being said, the rumored PXD severance seems extremely generous.
Ragoo said:Comeby! said:Lester Freamon said:
If you don't think that's good then your expectations haven't changed through last two downturns. A week per year of service plus unused PTO is what we are seeing on the service side. These last six months have seen a lot of "week for every year only for employees over X years" changes too.
It continues to amaze me how E&Ps will continue to ask services to bleed themselves dry on pricing while maintaining exact same quality of service delivery. All this while exhibiting the same excessive mentality in regards to their costs.
I am not saying that's you, and frankly I don't know you so don't take this as a personal attack. Just more making the commentary that the mentality of lavish spending on E&P side is not changing to the market.
I know you're not talking to me but I was the one that thought it to be a weak severance. That being said, I started on the service side. I've worked for the field engineers, service managers and company men. I've been on the operator side now for over 15 years.
I hear you. Operators want it cheaper, faster and done right. But I don't know if their spending is lavish.
Like I told my last service company boss, who walked into my office when I was an operations engineer and told me "prices go up, you guys should share that with us".....:-> you don't worry about how I run my business. You give me your best price for the service you can, while still being fair to you and your bosses, and the market will dictate if you get the work or not. Now that being said, I'd allow him to win a tie.
Not on the service side anymore, but service isn't a commodity. Not in this space. Winning a tie makes it sound like it is price first and foremost with quality somewhere down the line. Tough business to be in.
I think you missed the posters point though. Squeezing a service company on price but turning around and offering lavish severance comparatively doesn't really exhibit a "we learned from the last downturn" mentality.
*Most* service is a commodity. Even drilling engineers are seen as commodity. You are expected to get the well down in a certain number of days. I'm not saying it's fair but the industry is tough.
I didn't miss the point. I've been through a few downturns myself, both on the op and service side. I can go into the ins and outs of each but there's a lot to it and I don't think I will change any minds here.
Ulrich said:
I think O&G has much higher expectations about severance compared to most industries.
This was kinda my point. After all the s*** we have all been through in the last 5 months I would think things would revert to the mean but alas. It's only one data point, but being on the services side I can't help but see a trend.
For example of another data point, little brother is PETE '15 at a MUCH maligned operator with major positions in the Permian (an operator that pursued a very aggressive and ill fated acquisition in the last half of last year in case anyone needs help narrowing it down). He finished last year with a 20% bonus. From what I've seen first hand, some of the behaviors driving issues have not changed one bit.
If oil and gas companies didn't offer good bonuses (upside) and good severance packages (downside protection), how would they attract/retain talent? The industry crashes once or twice or sometimes 3 times every decade.
First off wanna say I respect the hell out of your experience and your posts here. You have been one of the stalwarts on this thread from the beginning and I am always interested in your insights.
You make an interesting point regarding commodities. I am not going to argue your point re: service companies being a commodity. That being said, operators literally exist to produce a commodity good and yet expectations on comp seem to be at a premium even after the last two downturns. Don't believe me? Ask any PETE on the board if they had to adjust salary expectations down when considering leaving the industry. It is just frustrating to me to watch the rapid compression of pricing to unsustainable levels without a rationalization of other costs. Drilling engineers may be a commodity but they still exist at a huge premium to other similarly qualified engineering roles in the services side and in other industries.
You make an interesting point regarding commodities. I am not going to argue your point re: service companies being a commodity. That being said, operators literally exist to produce a commodity good and yet expectations on comp seem to be at a premium even after the last two downturns. Don't believe me? Ask any PETE on the board if they had to adjust salary expectations down when considering leaving the industry. It is just frustrating to me to watch the rapid compression of pricing to unsustainable levels without a rationalization of other costs. Drilling engineers may be a commodity but they still exist at a huge premium to other similarly qualified engineering roles in the services side and in other industries.
the industry has had a need to run leaner problem for a long time.Goose06 said:
If oil and gas companies didn't offer good bonuses (upside) and good severance packages (downside protection), how would they attract/retain talent? The industry crashes once or twice or sometimes 3 times every decade.
Ragoo said:the industry has had a need to run leaner problem for a long time.Goose06 said:
If oil and gas companies didn't offer good bonuses (upside) and good severance packages (downside protection), how would they attract/retain talent? The industry crashes once or twice or sometimes 3 times every decade.
I'll offer an alternative thought to this.
Before I moved to an OEM in O&G I was in commercial construction and development. Similar style and management of projects, not quite as many zeros for the contract amount. More hours, more stress, similar to less comparative pay. Similar downturn cycles.
It took a year to get used to going home at 4:30pm, no one freaking out about schedules being behind or LDs.
Compared to commercial construction, O&G was heaven. Pay was a cherry on top.
The one downside for those non O&G was the weird worship of Engineering degrees. Didn't matter if you ran laps around your Engineering peers and out performed them. It was a cult like club of frat brothers.
Goose06 said:
If oil and gas companies didn't offer good bonuses (upside) and good severance packages (downside protection), how would they attract/retain talent? The industry crashes once or twice or sometimes 3 times every decade.
Chicken and egg problem though. O&G is careless with money when times are good, then cuts to the bone when times are bad. Everyone wants to publish massive growth year after year, but it's pretty easy to add up all the projections and realize that the math doesn't work, it's way too much for infrastructure and demand.
The high benefits and ridiculous severance are a symptom. It wouldn't surprise me if there are companies that have spent almost as much on severance as salary over the last few years.
That pattern made more sense when O&G was high risk to find anything and you didn't have long before everyone else piled into the play, but now it's different. We know right where the crude is, demand grows by a point a year (except this year), and there is plenty of supply. That says to be a low cost producer who can deliver consistently on modest or no growth plans. Half the firms in the industry still act like as long as they can get it out of the ground they can sell it at a profit.
The economics have matured, the industry hasn't quite caught up.
Ulrich said:Goose06 said:
If oil and gas companies didn't offer good bonuses (upside) and good severance packages (downside protection), how would they attract/retain talent? The industry crashes once or twice or sometimes 3 times every decade.
Chicken and egg problem though. O&G is careless with money when times are good, then cuts to the bone when times are bad. Everyone wants to publish massive growth year after year, but it's pretty easy to add up all the projections and realize that the math doesn't work, it's way too much for infrastructure and demand.
The high benefits and ridiculous severance are a symptom. It wouldn't surprise me if there are companies that have spent almost as much on severance as salary over the last few years.
That pattern made more sense when O&G was high risk to find anything and you didn't have long before everyone else piled into the play, but now it's different. We know right where the crude is, demand grows by a point a year (except this year), and there is plenty of supply. That says to be a low cost producer who can deliver consistently on modest or no growth plans. Half the firms in the industry still act like as long as they can get it out of the ground they can sell it at a profit.
The economics have matured, the industry hasn't quite caught up.
Agreed. We also need to make the midstream companies realize they aren't just selling bonds at a premium and accept some commodity price exposure.
Midstream pain is coming. The tollway business model is well... done
if produces aren't producing because of commodity prices then midstream isn't gathering or processing. Additionally midstream has price exposure on the refined HCs downstream. Some do anyways. I don't follow your comment.topher06 said:Ulrich said:Goose06 said:
If oil and gas companies didn't offer good bonuses (upside) and good severance packages (downside protection), how would they attract/retain talent? The industry crashes once or twice or sometimes 3 times every decade.
Chicken and egg problem though. O&G is careless with money when times are good, then cuts to the bone when times are bad. Everyone wants to publish massive growth year after year, but it's pretty easy to add up all the projections and realize that the math doesn't work, it's way too much for infrastructure and demand.
The high benefits and ridiculous severance are a symptom. It wouldn't surprise me if there are companies that have spent almost as much on severance as salary over the last few years.
That pattern made more sense when O&G was high risk to find anything and you didn't have long before everyone else piled into the play, but now it's different. We know right where the crude is, demand grows by a point a year (except this year), and there is plenty of supply. That says to be a low cost producer who can deliver consistently on modest or no growth plans. Half the firms in the industry still act like as long as they can get it out of the ground they can sell it at a profit.
The economics have matured, the industry hasn't quite caught up.
Agreed. We also need to make the midstream companies realize they aren't just selling bonds at a premium and accept some commodity price exposure.
Lester Freamon said:
First off wanna say I respect the hell out of your experience and your posts here. You have been one of the stalwarts on this thread from the beginning and I am always interested in your insights.
You make an interesting point regarding commodities. I am not going to argue your point re: service companies being a commodity. That being said, operators literally exist to produce a commodity good and yet expectations on comp seem to be at a premium even after the last two downturns. Don't believe me? Ask any PETE on the board if they had to adjust salary expectations down when considering leaving the industry. It is just frustrating to me to watch the rapid compression of pricing to unsustainable levels without a rationalization of other costs. Drilling engineers may be a commodity but they still exist at a huge premium to other similarly qualified engineering roles in the services side and in other industries.
I appreciate your comments and hope I bring some perspective to the group.
I think it's somewhat calloused for me to say several of these groups are commodities. All I can say is that investors at the end of the day want their money+. This is true for service, PE, public. They don't care how they lay waste to the employees ultimately. I've learned this the hard way.
Salaries are down across the board. The biggest indicator are the starting salaries of the incoming petroleum engineers. You go from 100% job placement for Aggie PETE's and rising salaries to 10% job placement with lower salaries. This somewhat makes its way up to the 5, 10 and 20 year engineers. Mostly through stagnant salaries and the cutting of benefits or shifting of the costs over to the employees.
As far as compression of pricing goes for services: I've always said, a dollar is a dollar is a dollar. Whether it's a dollar of additional revenue due to rising commodity prices or increase of production, reduction of operating or G&A expenses. Ultimately an increase of $1 of net cash flow can come from different places. When we look internally at our business, most of these are capital dollars spent in services. Every company is different but most shale drillers are/were spending a petroleum's engineer's salary many times over in a few hours/frac stages. So it's really the squeaky wheel. Do I cut a horizontal well off the tail end of a rig schedule and save $6MM, or do I negotiate $15k/stage in service savings (times however many wells) or do I cut salaries/lay off and impact my G&A? To me, my most important asset is my people. For example, my PE group shifted more of the health insurance costs to the employee. They did something dumb like add an additional $50 per pay period for their 25 people. I did not want to do that. When I did that math for us, it was not worth me nickel and diming my team and adding insult to injury. In a time when double digit raises and bonuses are hard to come by, I don't want to lose my aces. Especially when 1 wrong decision on a procedure or 1 errant coil tubing cleanout by a lesser skilled/experienced person will cost you multiples. A dollar is a dollar is a dollar.
Edits for spelling and grammar because I'm an engineer.
ChemAg15
Joined:
Dec 23, 2014
Posts:
2,805
How long do you want to ignore this user?
Cyp0111 said:
Midstream pain is coming. The tollway business model is well... done
The midstream business is pretty simple. If you want the midstream company to take more risk (volume risk, credit risk, commodity price risk, etc) then the midstream company will price the deal such that their expected return is higher.
Can you eleborate? I work for a Midstream major and management always brags about our fee based contracts.
It's fee based and runs w the land. What happens when no one will pick up the asset?
Cyp0111 said:
It's fee based and runs w the land. What happens when no one will pick up the asset?
They loaded the contracts up with MVCs in most basins so they're likely getting their return either way. Losing upside, sure. But they're a bit risk protected.
It's hard to get away from the tollway model if operating a DOT regulated pipeline. There has to be a FERC or RRC tariff. Losing imminent domain would make it virtually impossible to route a pipeline.
Depends if you're a gatherer or long haul pipeline and the age of the asset. I'm at a gathering company and we are mostly fee-based, meaning our price per barrel transported doesn't change, even when commodity prices decrease (ie always $1.00/bbl). Usually a depressed commodity price environment, it takes a little longer for us to hurt. It's not until the E&Ps stop drilling and we see lower throughput that we see lower revenue. Basically, we're starting to feel it now that new wells aren't coming online and older wells are declining off, while E&Ps started hurting day 1 when commodity prices declined. Let's just say there's a 3-6 month lag. And we only get hurt by one of volume & price while E&P gets hurt by both.
Oh and some gas processors have POP contracts where a part or all of their payment for processing is a "portion of proceeds", or in other words, a % of what the E&P makes (so has both volume and price risk).
And then long-haul pipelines and some other midstream guys have MVCs with a fixed price where they get paid $1.00/bbl for a fixed 20,000 bpd (for example), no matter if 20,000 bpd is transported or if only 10,000 bpd is transported. So a lot lower risk. Most companies require MVCs at the early stages of the project to help minimize their risk since they're putting so much money in the ground day 1.
Oh and some gas processors have POP contracts where a part or all of their payment for processing is a "portion of proceeds", or in other words, a % of what the E&P makes (so has both volume and price risk).
And then long-haul pipelines and some other midstream guys have MVCs with a fixed price where they get paid $1.00/bbl for a fixed 20,000 bpd (for example), no matter if 20,000 bpd is transported or if only 10,000 bpd is transported. So a lot lower risk. Most companies require MVCs at the early stages of the project to help minimize their risk since they're putting so much money in the ground day 1.
I think most of the near term risk is on the G&P side.
There have been some really successful JVs that align the producer and shipper. Concho has had some home runs there. JVs are always an option if a producer wants the midstream firm to take on more exposure.
If the market wants more commodity price exposure, they have the opportunity with E&Ps. Midstreams has no doubt assumed it's fair share of risk. Any risk increase will come at a cost.
If the market wants more commodity price exposure, they have the opportunity with E&Ps. Midstreams has no doubt assumed it's fair share of risk. Any risk increase will come at a cost.
CaptnCarl said:
There have been some really successful JVs that align the producer and shipper. Concho has had some home runs there. JVs are always an option if a producer wants the midstream firm to take on more exposure.
If the market wants more commodity price exposure, they have the opportunity with E&Ps. Midstreams has no doubt assumed it's fair share of risk. Any risk increase will come at a cost.
Producers should just shut in production where they can until the gatherers come to the table. Oversimplifying this post of course, but gatherers have debt covenants to meet too, so turn the screws by cutting off cash flow until they're willing to compromise on pricing and accept fee fluctuation based upon local commodity prices.
The comment about management bragging about fee based contracts insulating the business is not surprising.
Featured Stories
See All
Any direct path to Atlanta for Texas A&M goes through South Carolina
by Olin Buchanan
42:43
18h ago
4.8k
5:17
12h ago
2.4k
6:21
15h ago
2.1k
Key Matchups: No. 10 Texas A&M at South Carolina
by Olin Buchanan
EastTX_Aggie
A&M & t.u. Still Working 5-Star OU Commit Michael Fasusi
in Billy Liucci's TexAgs Premium
14