One prediction that I would like to make is that as soon as prices start comming down below a certain level, or it appears inventories may be headed for normal level, I expect drilling to be cut back or postponned quickly. No one wants to get caught drilling heavily in a falling price environment.
Hi Tomas - Thanks for the post - Here is an excerpt from the Bloomberg article which is worth reading.
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02/28 16:05
Apache, Anadarko Drill Cautiously as Oil Prices Leap (Update4)
By Mark Jaffe
Houston, Feb. 28 (Bloomberg) -- Apache Corp., facing rising drilling costs and oil prices dipping
below $20 a barrel, reduced its worldwide operating rigs to 12 from 61 early last year. Then, oil
prices almost doubled and natural gas tripled.
Apache's response? It added six rigs.
In the past, soaring commodity prices have sparked drilling booms. Not anymore. Oil companies are
abandoning their wildcatting past because of pressure from investors, a dwindling number of
promising fields and concern that prices may fall.
``There is too much uncertainty,'' said Roger Plank, chief financial officer at Houston-based
Apache, which extracts oil and natural gas on six continents. ``People aren't going to rush to drill,
regardless of the prices.''
Drilling in North America has expanded by 34 percent in the last few months as oil prices sped past
$37 a barrel, according to an industry survey. Still, the rally in drilling is well below the pace during
previous price surges, and the total number of working rigs is 11 percent less than two years earlier.
``There is a change in the mind-set of the industry,'' said Bill Sullivan, executive vice president for
exploration and production at Anadarko Petroleum Corp. ``It is more disciplined.''
Anadarko, the fourth-largest U.S. oil producer, had 69 rigs operating on Jan. 20, the company said.
That was one rig fewer than a year earlier, when oil prices were more than 40 percent lower.
``We are not going to chase the market,'' Sullivan said.
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