The past few months have not really seen any dramatic increase in the price of crude, perhaps except a 9.6% gain in June crude last week. Since OPEC decided to continue with their current output, it has caused the prices to tumble further as many are unsure of just what will happen to the industry in the short term. Most had assumed they would cut their current production of 30 million barrels a day, but they have not indicated that it would even be a possibility. They are waiting for others to fold and cut their production – or go out of business – first.
However, it’s not all bad news in the field. In fact, Exxon Mobil Corporation rose 3% after they announced that they were successful in drilling their second oil and gas well in Vaca Muerta in Argentina. This happens to be one of the largest shale resources in the world and is able to produce 448 barrels of oil a day, as well as a million cubic feet of gas a day.
Royal Dutch Shell recently entered a deal with an energy firm in Finland called ST1. This means they plan to divest parts of their business, including “retail, commercial fuels, and supply and distribution logistics operations.” Encana Corp., from Canada, is now working with Veresen Midstream L.P. along with Kohlberg, Kravis, Roberts and Co. in order to sell some of the pipeline and processing assets it currently controls. Hess Corp. announced interest in exploring the NWS (Northwest Shelf) for natural gas off the coast of Australia.
The dropping price of crude has had some negative effects on companies as well, and recently, Marathon Oil Corp. felt the pinch. They announced that they would be cutting back on their spending in 2015 as compared to 2014. They will be spending approximately 20% less in the coming year. However, they believe that by focusing on fewer projects, they can make the most of the ones currently underway. This includes three large shale deposits in the United States. They believe the deposits will be very profitable and will provide them with a good 2015 despite the fact that they scaled back operations and exploration, even if the price of oil does not improve.
While the dipping oil and gas prices are naturally frightening for any business in the industry, most are optimistic that the prices will return to normal levels and that they will not have to make drastic changes to survive.
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 manufacturing, Mud Systems, Rig 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.