There is hope

Oil and natural gas exploration -- geology and geophysics
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chrisvecan
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There is hope

Post by chrisvecan »

Oil prices surged today, so did oil stock prices. We have been hit by both oil price war and pandemic, but we will come out of it!

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geophix
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Re: There is hope

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Things started to go down several years ago (around 2013?) and I expected then it should be over long time before now. But it looks like we just hit the bottom. It's really an awful time for a lot of people working in the oil industry, including exploration geophysicists.

GuyM
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Re: There is hope

Post by GuyM »

Oil does the boom-bust thing. Same as any commodity.

In my career it was in '92 '00 '08 '14 '20 - if you ask the old hands they'll walk you back to '84 and '76.

The 8-year-cycle-as-was tied to the time from licences awarded to first oil production, on average; US unconventional production has shortened the lag time from a demand increasing to production responding.

The problem is when you shorten that chain you also increase the responsiveness to a down-cycle.

Assets that you borrowed money to buy become millstones as the cashflow dries up, and unconventional production has always been about sustaining the cashflow. Cost accounting tends to hide this on the books - that's why thoughput accounting - cashflow - matters so much.

You'll see this with the companies that go to the wall in the current economic downturn. Not just oil companies - retail, manufacturing, and so on. The retail chains who buy large, buy cheap and run big warehouses have the same problem. Lots of stock they can flow rapidly, but no demand.

Three guesses (I'd hesitate to call them predictions as we are uncertain times)

- consolidation in the oil patch in general, and US shale companies in particular; downturns are always investment/buying opportunities for distressed assets, and economies of scale work well for the recovery

- big data, machine learning and automation matter in the rebound; hard, lean times tend to drive innovation to "deliver good results with less" - and its in downturns you tend to see people leveraging their severance pay into new start-ups

- offshore redux; companies will be looking for the next (last?) round of giant oil-fields where they can get long-term stable production at a known cost. The world is awash with high quality seismic data in frontier basins (or deeper water) in companies data libraries, much of it partially amortized since the 2014 slowdown.

So - yes, the industry will be back, but it will be back leaner, relying on technology to replace lost experience.

I've been wrong before, but I don't see we'll see the global seismic fleet or crew count back up to it's 2011-12 heyday...

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geophix
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Re: There is hope

Post by geophix »

I agree with the consolidation. Some companies will go bankrupt, and companies with a lot of cash such as ExxonMobil will survive and get more market shares in the future.

As for big data, it's actually a good opportunity for geophysicists, especially those fresh graduates to seek jobs in this field as data scientists. If you can get a degree in geophysics, that means you can deal with math and computer -- so you can be a data scientist if you set your mind to it.

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geophix
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Re: There is hope

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According to Houston Chronicle:

The oil and gas industry shed a record-breaking 26,300 jobs in Texas during April as shutdowns related to the coronavirus pandemic cut demand and sent commodity prices to record lows.

Drilling, completion, production and related sectors employed 192,600 people in Texas last month, a 12 percent drop from the 218,900 jobs in March, new figures from the Texas Workforce Commission show.


It could take a while to get out of the bottom.

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