Drilling outlook: What will the oil prices mean for drilling activity?

摘要

It's getting harder to ignore the 800-lb gorilla in the room with sub-$70 oil. So we'll pass on the topic of technology this month to address the issue of greatest interest to the industry, which is how the recent downturn in commodity prices will impact drilling. Sentiment deteriorated rapidly in December 2014, primarily over future uncertainty in business conditions. Operators were reformulating 2015 capital spending plans with early estimates from the sell-side financial houses speculating on a spending downturn from 8% to 15%, depending on which side of the $70 line oil settles on in 2015. Oil prices had been kind to the industry over the last three years but not so much lately, with oil dropping 30% from its peak in June 2014 to the post-OPEC meeting low below $70 in December. Projections of field activity for 2015 have followed a similar trajectory. Early prognostications centered on a 200-rig decline in a sub-$80 world. When domestic pricing dropped below the $70 marker, those projections ballooned to 500 rigs, with the carnage slated for first-half 2015.