The current downturn in oil prices brings new challenges to both operators and service providers, but both agreed in a panel discussion Tuesday morning that it presents opportunities for changes and improvement as well.

Matt McCarroll, president and CEO of Fieldwood Energy, and Tom Teipner, vice president, North America Offshore, for Schlumberger spoke at the OTC breakfast “Living the Low Oil Price Environment.”

“In this low oil price environment, we want to maintain flexibility and liquidity,” McCarroll said. “We’ve gone from eight drilling rigs to one currently working. We have no long-term drilling contracts. As a private company, we’re not worried about what Wall Street thinks our production volumes should be. We’re deferring capital projects, but all the projects we’re deferring are on our existing acreage. We’re not losing any of those opportunities. We’re going to produce enough oil and gas this year to be cash flow positive.”

Teipner said that the current price environment invites adopting new ways of approaching projects and new ways of integrating service providers into projects at an earlier stage to avoid issue down the road.

“The integrated service company price structure is not the cause of higher operating costs in offshore operations,” Teipner said. “It’s hard to control costs in deepwater because what we are trying to achieve is inherently very difficult, especially in the deepwater Gulf of Mexico. We’re pushing boundaries every day.”

The true source of cost escalation is not supplier pricing but instead complexity, regulatory burden, design inefficiencies “and, specifically in deepwater, the occasional train wreck that results in dramatic overspending,” Teipner said.

“How should we, the service industry, react to these challenges, and how should companies like Schlumberger help solve the fundamental efficiency and cost challenges?” Teipner asked. “We have found that the most effective way to have this level of impact is through better early collaboration and engagement with our customers.”

McCarroll said that Fieldwood considers the current downturn an opportunity for acquisitions.

“We’re going to take all our excess cash that we’re not spending on near-term capital and we’re going to look for acquisitions,” McCarroll said. “We’re going to focus on our highest quality and highest return projects. We’ll do about 100 completions on existing wells this year. And we’ll drill probably 20% fewer wells than we drilled last year. We’re prepared for what we believe will be a favorable acquisition market in the Gulf of Mexico. There’s been over $30 billion of oil and gas asset company transactions in the Gulf of Mexico in the last 30 months. We don’t think that’s going to change. Once prices settle out, which I think is happening, we think we’ll see a lot more consolidation opportunities. We want to be in a position to take advantage of those.”

McCarroll said that Fieldwood is continually looking for ways to do things better.

“If there’s a situation where we think we can do something better or do something differently, we’ll do that,” McCarroll said. “We just bought our own P&A [plugging and abandonment] company. We looked at plugging and abandonment as a service, and we thought it wasn’t being provided in the manner that we thought it should be. We were able to buy assets of a service company. We’re crewing our own crews. We like to look at it as an all-star team of P&A. We’ve hired 60 people in the last two days. In the next 10 days we’re going to have eight P&A spreads working for the company. We think we’re going to [be] a lot more efficient and save a lot of money.”