There is good news and bad news. The good news is that wells decline very rapidly and the glut of oil production will evaporate rather quickly. The bad news is that there is so much associated gas I suspect T. Boone Pickens (who is in his 80s) comment that he expects to see $6 gas in his lifetime…well, how long is his actuary table give him? (if you didn’t see the video…)
http://www.cnbc.com/id/102518977
The biz is in trouble. The service companies and drillers are going under and the majors are standing back. These companies are willing to simply keep operational with the lowest prices they can afford, but no one is biting. So look for many small wireline, mud, tool, workover services and drilling companies fold up. That means when production declines, ramping back up is going to be problematic. Those energy “banks” are not going to want a piece of this. They are getting burned and don’t want to be the not so proud owners of a bunch of stacked out drill rigs.
The layoffs are not just in the field. There are already hundreds, if not thousands, of geologists and engineers being laid off. And the young ones are likely to have a car payment and a house payment and may have some trouble getting out from under debt to even take on a new job, if they can find one in a related field, like hydrology or government service.
It was brought to my attention that Bloomberg ran an article (20 May 15) about how small companies were going bankrupt and leaving mineral owners unpaid for their mineral. They are robbed. That company can reorganize and go on drilling and producing. The mineral owner? His or her interest may be lost forever and as a wasting asset, is basically stolen by the incompetence of the individual or company filing bankruptcy.
We’ve seen it all. It was obvious. Art Berman ….
http://oilprice.com/Energy/Natural-Gas/Natural-Gas-Prices-To-Crash-Unless-Rig-Count-Falls-Fast.html
… looks like a genius after being ridiculed by the industry. But remember just because Cassandra was right doesn’t mean she was liked. But even the Greek gods will not stop this crash.