$50 oil, now what?

[Darkane]

My personal belief if stability can reign now the year will be saved and 2017 will have an optimistic outlook.

Upon reading some articles this morning Saudi is planning to announce increased production during their June 2nd OPEC meeting. Sigh.

[ExtraSlow]

$50 is a psychological hurdle, but it actually doesn't make much difference to real project economics.

My opinion is that $60, with a consensus forward strip price RISING significantly past that, is where we see more projects get sanctioned, and activity planned. Actual activity will lag that date by a minimum of 4 months, probably more like 8, barring seasonal factors. We still think very seasonally here in Canada, so if that point is reached in Q4, activity may not pick up until Q3.

[roopi]

Bonuses for a job well done?

[Neil4Speed]

It was $27 in Februrary, with limited change in fundamentals... I don't think its here to stay. I hope I'm wrong though.

[nzwasp]

Time to party...

[HomespunLobster]

Usually after the May long rig count picks up, same with beginning of June. It's usually when road bans are lifted. Not a single rig updated a move on Tuesday. It'll be slow till q3/q4. That's what I've been hearing

[bjstare]

Originally posted by ExtraSlow
$50 is a psychological hurdle, but it actually doesn't make much difference to real project economics.

My opinion is that $60, with a consensus forward strip price RISING significantly past that, is where we see more projects get sanctioned, and activity planned. Actual activity will lag that date by a minimum of 4 months, probably more like 8, barring seasonal factors. We still think very seasonally here in Canada, so if that point is reached in Q4, activity may not pick up until Q3.

I agree with all of this.

We're far from out of the woods.

[Hallowed_point]

I'm glad that I bought my condo when I did. I think it's going to bounce back to a lesser degree by late summer around here. Just my non expert opinion of course

[msommers]

I suspect if $50 can stabilize, many companies can be positive cashflow. It's the uncertainty that is still plaguing many to move forward, imo.

[HiTempguy1]

I simply don't see how anyone can believe/forecast things ever getting back to where they were with the way the general worldwide economy is.

Anybody that was specifically devoted to new construction style work in O&G should continue their transitions to other fields of employment/training. Even if we see $70-$80 in the next two years, I think the major oil producers bit off more than they can chew and have realized a $16bil facility like KEARL is no longer necessary/worthwhile.

I'm placing bets on Suncor FAM being the last mining oilsands site built. Anything else will be SAGD, which strikes me (from my limited exposure to it) as being much less manpower intensive, both in design, construction, and running requirements.

As for $50, my understanding is that lots of sites can break even/earn a small profit at $50/barrel.

[Mitsu3000gt]

I'm happy to see it at $50, it's come a hell of a long way even though the price still blows. Companies can start actually making money depending on what they are in to. Many still need $60-65US though, so there is a ways to go, plus the obvious uncertainty. The Saudi's are also pissed at the USA for allowing 911 families to sue them, so maybe they will fight back with oil production haha.

[killramos]

Yea AECO is still barely over a buck, and whether or not companies are cashflow positive is irrelevant when the banks won't let anyone borrow to develop.

Right now it's either sell your soul in a private placement ( only available to market darlings due to collapsed stock prices ) or stagnate for another year or two until the banks force everyone's debt to a more comfortable position. Even if you can get a PP or secondary offering, you better know the bank is taking at least half of the raise against your debt.

IMO we haven't seen nearly enough companies go under for this to be back on the upswing.

[ZenOps]

Bet it all on tails. Wait no, red.

[suntan]

Double meat Subway, that's what.

[revelations]

From my understanding, the OG industry lags behind the curve on price (intentionally). After a price drop things take time to slow down, similar to if the prices jump.

Even if oil jumped to 100$ next week, it would take, probably 6 months for a recovery of any kind to materialize .... IMO

[Neil4Speed]

Originally posted by Mitsu3000gt
I'm happy to see it at $50, it's come a hell of a long way even though the price still blows. Companies can start actually making money depending on what they are in to. Many still need $60-65US though, so there is a ways to go, plus the obvious uncertainty. The Saudi's are also pissed at the USA for allowing 911 families to sue them, so maybe they will fight back with oil production haha.

I'm convinced that America prefers low oil prices, they are a net consumer after all. Also, low prices at the pumps are good for an election for the democrats. Little (comparatively) of US GDP comes from O&G.

[BavarianBeast]

Decided to Jumbo size my donair today.

[Dave P]

I went out and bought a Wake Setter and lifted dodge. ALBERTAS BACK BABY!

[Sugarphreak]

...

[suntan]

Originally posted by revelations
From my understanding, the OG industry lags behind the curve on price (intentionally). After a price drop things take time to slow down, similar to if the prices jump.

Even if oil jumped to 100$ next week, it would take, probably 6 months for a recovery of any kind to materialize .... IMO

Definitely. People keep thinking that the US can just turn on oil production at the flick of a switch but it's way more complicated than that.

We could be in for a supply shock actually by the end of the year.