hdrjr, Good Morning.
Two observations. This is not good news for MDR, which will find it difficult to recover having shut these yards down. I was hoping that MDR would shrug off the asbestos thingy and continue to lurch along until infrastructure construction picks up again, by my reckoning around third quarter 2000 (in the GOM at least).
As for the drilling scene on land, US: I believe drilling contractors like Nabors, H&P, etc. - these guys were hit abruptly by the slowdown and shut down rigs quickly and laid off staff equally so. It's no easy or cheap thing to cold stack properly, and I suspect many rigs were stacked semi warm, which can be harder on equipment than cold stacking. Certainly nothing has been spent on upkeep or refurbishment during this latest lull.
This "chop & drop" philosophy is a characteristic which became established in the downturn of the '80's and has only become more commonplace in this latest downturn, especially with the service companies: Lay off staff at the earliest sign of weakening, slash overheads to preserve the cash flow at all costs, and never mind about your skill base - the shareholder's satisfaction is much more important than the customer's.
I believe this shortsightedness is due to the leverage that investment houses have over Corporate America, a force which dominates the somewhat diluted market leverage exerted by operators. After all, we operators have been doing the same thing for years now, too, so our credibility is also damaged - sign up for a 5 year contract, and cancel after 2 because of market forces - that kind of thing.
The result in the patch is that experienced personnel are harder to come across, the remaining ones therefore have to work harder, and customers like myself are generally forced to accept second and third rate services because there are no longer first rate ones around. Hence your first cousin's hubby is running his ass off.
This will be MDR's problem when things pick up, incidentally.
As for Shell.....well, when it comes to predictions, they're a legend in their own mind. Pay no attention to that humbug. Average oil price next year will be $19 - 25.
Regards to All,
Aggie |
