True, but many projects (depending on the operator) will see delays if they can be economically justified... unfortunately for my 2nd largest client, 25% or more of their business currently depends on PBR and PBR has been -- shall we say... unreliable in the recent past... constant delays, re-engineering/re-bidding, local sourcing/content issues, etc. Add in new delays for projects just on the "drawing board" at this point and they are seeing a significant slowdown in sales and cash flow for 2015, hence the looming layoffs despite being 100% dedicated to very high spec ultra-deepwater projects, that as your article points out, rarely are simply cancelled simply because of oil price slumps in the short term.
I can't speak to effects in the shales as I have no real personal experience with those. Just look at how long it took CVX (and how much money they've already spent) to really start production efforts in St. Malo and Jack despite starting those during fairly good/stable oil price environment -- so no way they'd simply halt now.
During slumps like these, the major offshore projects may continue, but companies are quite hesitant to jump on new, similar projects until they feel more comfortable about stable oil prices -- note that it isn't always about the current level of the price of oil that companies worry about, it's the desire for somewhat stable oil prices down the road (and their self-imposed "hurdle" rate) that drives decisions to proceed or delay jumping in to develop brand new major projects -- especially if it means significantly increasing their leverage/debt to get them off the ground and rolling, when their assets in the ground are losing value this dramatically and quickly -- some/many will see their credit capacity lowered no matter how solid their company financials look. |
