Another 10 rigs down. Dropped 133 since last year. Hopefully this pushes costs down.
Houston..we have a problem....
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Last: 4 days ago by one MEEN Ag
Wait, costs can go down?Fredd said:
Another 10 rigs down. Dropped 133 since last year. Hopefully this pushes costs down.
Sure. Stop drilling and costs will go down.
The problem is that the prices r getting close to where they will start dropping Frac crews to compensate.
one MEEN Ag said:
Shale put the kabosh on the commodity cycle where it was a couple of good years followed by a bad year. The good times returned when the 100 year trend of 1% yearly increase in demand caught up with supply more so than supply curtailed to demand.
Shale's cycle is different. It put a price cap on production. The floor is rising as PE dumb money evaporates, OFS cost more, and decline curves rear their ugly heads.
Shale turned oil/gas into a landlord-like relationship. Whoever got the assets the cheapest the longest time ago is the biggest winner. Difference is you can kick a renter out and rent the house again. Wells only have a finite production.
Very well put.
The best time to buy real estate was 10 years ago.
The second best time is today.
Push costs down? You guys aren't following the labor market. I have a few service companies and the demand for talent continues to grow. The Wall Street Journal article on the lack of engineers entering the space was only half the problem. The other half is that no one wants to work long hours, away from home in difficult conditions.
As I tell all my customers, book at least a 5% annual increase in service costs every year in the future. Between the ridiculous cost of maintaining ISN and Veriforce plus the lack of talent things are only going to get more expensive.
As I tell all my customers, book at least a 5% annual increase in service costs every year in the future. Between the ridiculous cost of maintaining ISN and Veriforce plus the lack of talent things are only going to get more expensive.
v/r
That's just not reasonable. Hell, depending on the service, costs are already down 10-20% this year.
Yes, labor is up. Just about everything else is down.
And, most importantly, utilization is way down. High utilization allowed service companies greater profit margins. A lot of them said they won't lower those margins, they'll park equipment. Their bluff has already been called.
Yes, labor is up. Just about everything else is down.
And, most importantly, utilization is way down. High utilization allowed service companies greater profit margins. A lot of them said they won't lower those margins, they'll park equipment. Their bluff has already been called.
Please don't tell your clients that. Many have been on the service side before and have that perspective including seeing pricing and service quality across all your competitors.
Not to come across as harsh, but, service costs on the D&C side are relatively binary in cash flow.
I work at a major in operations. Service costs are dropping for us as expected
How about that $85 oil?
We staying steady or moving to $100+
We staying steady or moving to $100+
nosoupforyou said:
How about that $85 oil?
We staying steady or moving to $100+
Interesting downstream the gas to diesel spreads are increasing like crazy. Read it's primarily because of the expectations of an economic soft landing. Makes sense. Transportation is up to bring the "goods".
Was almost even gas to diesel but now spreads are over 20%.
I was surprised no one mentioned it Friday.
I'd be curious how much further to it goes. I think economy gonna hit a wall soon.
I'd be curious how much further to it goes. I think economy gonna hit a wall soon.
Going to start dropping frac crews? Already been happening since Feb/March. Rigs go down, frac crews go down, that's how it works.....bullfrog1 said:
The problem is that the prices r getting close to where they will start dropping Frac crews to compensate.
Ngls and Nat gas really weighing on returns.
Saudis extending their cuts thru the end of year.
WTI $87
WTI $87
Bring on the new jacked up F-350s, Raptors and boat buys, baby!
Raptor MSRP just went up another 1k every 200 miles from Houston to Midland.
Someone with more time to kill than myself should see how many times the boat or truck joke has been made in this thread. I bet it is more than 15.
Who said we're joking?
i bet you dont see much rig action into year end.
What is it going to take to start building rig count again? WTI at $2,000? Half kidding.
Agree. CAPEX budgets have been spent and nobody wants to get too greedy and screw up a good thing. We've all learned our lesson.
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CPDAggie10 said:
Agree. CAPEX budgets have been spent and nobody wants to get too greedy and screw up a good thing. We've all learned our lesson.
Credit and lenders have also become a lot more scrutinous with loans and financing terms. Trying to nail any lenders credit box these days is like trying to pin a tail on a Donkey.
CPDAggie10 said:
Agree. CAPEX budgets have been spent and nobody wants to get too greedy and screw up a good thing. We've all learned our lesson.
Nobody wants to get too greedy? In the oilfield? Color me suspicious.
yea, i'd rephrase that to "we've all got recent painful memories of our lesson" so I would expect capital discipline over the next 12-24 months. because "learned" implies a longer institutional memory and discipline than I think the history of O&G would warrant.GarlandAg2012 said:CPDAggie10 said:
Agree. CAPEX budgets have been spent and nobody wants to get too greedy and screw up a good thing. We've all learned our lesson.
Nobody wants to get too greedy? In the oilfield? Color me suspicious.
Ron Burgandy "I don't believe you"CPDAggie10 said:
Agree. CAPEX budgets have been spent and nobody wants to get too greedy and screw up a good thing. We've all learned our lesson.
CPDAggie10 said:
Agree. CAPEX budgets have been spent and nobody wants to get too greedy and screw up a good thing. We've all learned our lesson.
It will be different next time around
"Lord give me just one more boom and I promise not to waste it."Ogre09 said:CPDAggie10 said:
Agree. CAPEX budgets have been spent and nobody wants to get too greedy and screw up a good thing. We've all learned our lesson.
It will be different next time around
How? People aren't going to try and make money?Ogre09 said:CPDAggie10 said:
Agree. CAPEX budgets have been spent and nobody wants to get too greedy and screw up a good thing. We've all learned our lesson.
It will be different next time around
Note the winking face. The industry doesn't learn lessons, and the cyclic nature will continue.
Companies start seeing other companies around them increasing CAPEX in response to higher oil prices, they aren't just going to sit on their hands. It only takes one company to start a cascade into more and more activity.
Something else companies are always going to remember is that this is forever a cyclical business, and they are going to capitalize on higher WTI if/when it comes around.
Something else companies are always going to remember is that this is forever a cyclical business, and they are going to capitalize on higher WTI if/when it comes around.
Absolutely not true. Hell, I'm already hearing about natural gas companies adding rigs/frac crews by year end!CPDAggie10 said:
Agree. CAPEX budgets have been spent and nobody wants to get too greedy and screw up a good thing. We've all learned our lesson.
I should re-phrase it to more "capital discipline", even in higher price environment.
Like someone said, the stupid money from banks and lenders is not there anymore.
Like someone said, the stupid money from banks and lenders is not there anymore.
Yep. They can try to increase CAPEX but they aren't getting lenders to support. And if they reduce their dividend to increase CAPEX their stock will get hammered. It would probably get hammered if they raise CAPEX and keep the dividend
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