One of the most curious things to happen over the course of recent weeks was when the OPEC secretary general said that oil prices have nearly bottomed out, and that recovery is imminent. While this was great news – taken with a grain of salt, naturally – it was not the only thing he said. He also said that there was the potential for the price per barrel of oil to reach as high as $200 unless companies started investing in the industry again. What does this mean though, and how are companies to invest more in their businesses?
It can actually mean different things to different sectors and companies. It’s important to understand that there are different types of investment.
One of the areas where there was a bit of a slowdown in recent months as the price of oil dropped was in the realm of exploration. Fewer companies were willing to put in the money, time, and effort needed when it came to exploration. In fact, they were pulling in enough oil from the wells and rigs they already had, making exploration seem almost pointless.
What about now though? If the price of oil does start going back up, does this mean that companies should start increasing their exploration again? It doesn’t necessarily mean that for everyone. Those who still have strong wells may find that they don’t need to invest in exploration, at least not as much. They can still take things a bit more slowly. Some companies may want to proceed with more exploration, although they may still want to keep it to a minimum in the early days of recovery.
Better Technology and Machinery
An area where companies of all sizes should consider investing is better technology and machinery. While there may be an initial investment cost, it’s important to think about the savings down the line. Better machines and tech mean that things will be running far more efficiently overall, and this can mean savings. It’s better to have well maintained or new equipment than it is to have equipment that’s old and breaking down all of the time.
These are just some of the ways that companies can invest or reinvest in their oil and gas businesses. Of course, it’s still too early to know what’s happening with the oil prices no matter what OPEC might say. It’s time to wait, watch, and listen so you can make the best decisions for your company.
About Oil Works Inc.
Oil Works, Inc. is a complete drilling rig equipment manufacturer and service provider based in the Permian Basin for over 20 years. OWI’s product and service offerings include Derricks, Substructures, Drawworks, Mud Systems, Walking Systems, Power Generation, Control Systems, Iron Roughneck Repair and Upgrades and complete Rig Solutions built to API and ISO standards. OWI is also proud to offer 24/7 Service and Support.