This week’s CERAWeek gathering in Houston was as good a place as any to assess the US oil industry’s state of health. Under mostly fair skies, hundreds of executives gathered to hear the likes of ExxonMobil chief executive Rex Tillerson and BP chief executive Robert Dudley hold forth on the current state of affairs.
This week’s CERAWeek gathering in Houston was as good a place as any to assess the US oil industry’s state of health. Under mostly fair skies, hundreds of executives gathered to hear the likes of ExxonMobil chief executive Rex Tillerson and BP chief executive Robert Dudley hold forth on the current state of affairs.
The upshot: The industry is down but not out. Some companies, especially big independents like ConocoPhillips, are looking to put more steel in the ground in spite of a precipitous collapse in benchmark crude futures. Certainly US oil industry workers have faced a wave of layoffs that have hit service companies like Halliburton and Schlumberger especially hard.
Two clear camps of oil explorers emerged at this year’s CERAWeek discussions. While it is still early days, that split may point to the US shale industry coming full circle.
In one camp are independents like ConocoPhillips and Pioneer Natural Resources who are priming for a recovery in US shale activities. In the other camp are majors such as ExxonMobil and BP who are more cautious.
Top US independent ConocoPhillips expects to increase its rig count in 2016 and 2017 amid strengthening oil prices, chief executive Ryan Lance told CERAWeek attendees.
"Hopefully if demand stays up globally we ought to see some slight strengthening in the price," Lance said. "We're planning for a ramp up in activity as we go into 2016 and 2017. But that will be a function of whether we see that commodity price improvement or not."
Meanwhile smaller and more nimble operators like Pioneer are preparing to boost their rig counts following early signs of crude prices bottoming out. The US independent plans to expand its rig count in the Eagle Ford in Texas by this July.
"We are looking to increase our rig count by 5 to 10," chief executive Scott Sheffield told Argus on the sidelines of CERAWeek. "We are well hedged and we have low operating costs."
Meanwhile ExxonMobil’s Tillerson is hunkering down to wait out the lower prices.
“People need to settle in," Tillerson told attendees. "This [low oil price] is with us for a while."
Most executives concurred that the pace of the recovery will be a lot slower than the heady growth of 2014 because of a supply overhang and prospects of more shipments from producers such as Iran.
"I would say the recovery has already begun," Hess chief executive John Hess told Argus. "But the recovery will be at a much slower pace."
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