With the free fall of oil prices in 2014, producers are scrambling to get their bearings and stabilize their plans while awaiting the recovery. Intuitively, a downturn doesn't feel like a positive thing, but for those willing to look a little closer, it's not all doom and gloom.
In other areas of life, times of struggle often produces important changes that strengthen a person or organization and solidify solutions for a healthier future. This is the posture being taken by many industry leaders during the current oil bust. Even though the decisions can be tough, many understand that a downtime can also hold opportunities.
Recently at the NAPE Business Conference in Houston, several speakers added to the optimistic refrain as they talked about these opportunities. Most prevalent was the opinion that the current squeeze forces companies and individuals to become more efficient. In the middle of a boom, things are going ninety miles an hour and things can be taken for granted. A downturn allows some time, space and energy to focus on fundamentals.
This is a wake up call, of sorts, for producers to take a hard look at their systems, processes, personnel, technology and strategies outside of the frenetic pace they were in a year ago. “When you’ve been chasing wells fast and hard, this downturn gives you a chance to develop”, said Gary Evans (Chairman/CEO, Magnum Hunter). Leaders anticipate that smart producers will develop new technological advances and become leaner and stronger over the coming months.
“Kurt McCaslin, (VP Operations, Anadarko) added, “All those people who were chasing rigs have been redeployed to chase costs and inefficiencies. There was an initial culture shock, but this has turned into mining the opportunity, not only for improving the company, but also for workers to strengthen their own skill base.”
Certainly there will be operators that succumb to the current oil bust and don’t make it. So, what will distinguish the winners from the losers? This panel’s consensus was that it’s all about relationships, reputation and execution.
During a recent analyst meeting, Rex Tillerson - Chairman and CEO of ExxonMobil led a discussion that included his company’s strategies as they face the current pricing instabilities.
“Tillerson commented that, “Yeah, it provides us a whole lot of different kinds of opportunities, not just in terms of accessing new resources through various means. But getting the cost structure back to where we believe it’s more appropriate. So, yeah this provides us a whole host of opportunities to strengthen our underlying fundamental business and be well positioned than for whatever happens in the future.”
photo credit: Gerd Altmann CC0
