Oil Price Crash a Blessing In Disguise for U.S. Shale

oil-pumps-fieldFinancial Sense

By Mark A. Hill

Despite the doom & gloom, something new is happening in the oil industry. You need to prepare for the coming surge.

One of the subtlest, most effective moves in sports is the head-fake. It’s a thing of beauty when done well. In the energy commodity business, it can be disastrous to anyone who falls for it.

Right now, everyone is focused on low crude oil prices, and the subsequent layoffs and rig shutdowns that follow. I say it’s a head-fake, because too many companies are buying into the narrative and scurrying for cover, while the smart money slips past them to victory.

In the past, a downward move of 50% would have spelled disaster for the oil and gas industry. This time, a convergence of new factors suggests a different view of what’s happening. If you can read between the lines, you can seize your share of opportunities now, while prices are down, and march into the next cycle well ahead of your competition.

The News Gets Better the Closer You Look

Despite lower prices and dire news, particularly in the American oil markets, the fundamentals generally point to a flurry of need. If oil prices can merely get back to the $60-$70 a barrel range in the next 12 months, and stay there for a reasonable period of time, U.S. production is poised to respond.

Certainly, many wells have shut down. Headcount has been reduced. But, the infrastructure is there to pick up the pace at a moment’s notice. The recent volatility has created a much leaner breed of competitor. And from a logistics standpoint, a multitude of options have emerged – including rail, barge and tankers, to name a few – mostly over the past five years.

In 2015, oil field, drilling and information technology have combined to create a perfect storm of capability and agility that will allow American oil markets to respond with a speed typically only seen in the digital realm.

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