Oddly, that dumb but catchy little song came out in 1930. It was meant to raise spirits during the Great Depression, but hindsight tells us the poor souls who lived through that economic crisis had many long years ahead of them before they could be “happy.” And for much of Europe, Africa and Asia, the end of the Great Depression meant the start of World War II.
So why the long face? It’s just that the pundits who hound me with emails on a constant basis seem all over the map when it comes to the potential recovery of the oil and gas industry. Here are some of the headlines:
- “2016 offshore discovered liquids resources were 90% lower than 2010” (Rystad Energy);
- “Shale productivity driving response to OPEC cuts” (Morningstar);
- “Global oil and gas exploration likely to return to profitability in 2017” (Wood Mackenzie);
- “U.S. oil and gas prices may tumble on Trump’s ‘Energy Revolution’” (Bloomberg);
- “OPEC data promising, but price headwinds remain” (Stratas Advisors); but then
- “Research shows rise in U.S. oil and gas industry confidence” (DNV GL).
So what’s going on? Is 2017 going to be a good year or not so great? Personally, I like some of the more recent press releases I’ve gotten, starting with the DNV GL report. It points to short-term agility but long-term resilience, at least in the U.S. market, and is looking to natural gas to play an increasing role. Huh? Natural gas? The recent bully in product prices? But, yes, natural gas seems to be making a U.S. comeback. Again.
In more good news, the international rig count has increased for the third straight month, according to RBC Capital Markets. With a Brent forecast of $58/bbl, land rigs were up 5% year over year, though offshore rigs were down 9%. But overall, the rig count increased about 1% from December to January.
So my final note of sunshine? A report from Edison Investment Research titled “Tullow dipping a toe back into exploration.” According to the report, despite Tullow’s significant costs in its TEN and Jubilee prospects, the company is still dedicated to spending some money (though not as much as in the past) on exploration, not only focusing its efforts on near-field step-outs but also doing some wildcatting, including prospects in Ghana and Kenya.
“G&G [geology and geophysics] elsewhere is continuing with an eye to moving assets in Mauritania (3-D seismic in 2017) and Namibia (further work being performed) toward drill-ready status,” the report stated.
In our “World View” this month, Leigh-Ann Russell from BP talks about learning from our mistakes of the past. I hope that will be the case.
Contact the author Rhonda Duey at rduey@hartenergy.com.
Recommended Reading
Chevron Hunts Upside for Oil Recovery, D&C Savings with Permian Pilots
2024-02-06 - New techniques and technologies being piloted by Chevron in the Permian Basin are improving drilling and completed cycle times. Executives at the California-based major hope to eventually improve overall resource recovery from its shale portfolio.
CEO: Continental Adds Midland Basin Acreage, Explores Woodford, Barnett
2024-04-11 - Continental Resources is adding leases in Midland and Ector counties, Texas, as the private E&P hunts for drilling locations to explore. Continental is also testing deeper Barnett and Woodford intervals across its Permian footprint, CEO Doug Lawler said in an exclusive interview.
TPH: Lower 48 to Shed Rigs Through 3Q Before Gas Plays Rebound
2024-03-13 - TPH&Co. analysis shows the Permian Basin will lose rigs near term, but as activity in gassy plays ticks up later this year, the Permian may be headed towards muted activity into 2025.
For Sale, Again: Oily Northern Midland’s HighPeak Energy
2024-03-08 - The E&P is looking to hitch a ride on heated, renewed Permian Basin M&A.
Texas Earthquake Could Further Restrict Oil Companies' Saltwater Disposal Options
2024-04-12 - The quake was the largest yet in the Stanton Seismic Response Area in the Permian Basin, where regulators were already monitoring seismic activity linked to disposal of saltwater, a natural byproduct of oil and gas production.