Helping America Navigate a New Energy Reality

Why North-American Oil Is Positioned To Win In The Long-Run

By on 23 Mar 2016 in analysis, notable posts

(oilprice.com) Did U.S. investors complete the U.S. E&P’s revolutionary transformation of the global oil market at the end of February?

Very possibly, yes. At a time when oil companies large, medium, and small were cutting more from 2016 capex budgets, Americans were expressing their confidence in the U.S. E&P’s sector’s future, pouring $9.2 billion in new equity into the beleaguered sector. As of March 1 Bloomberg reported:

U.S. oil and gas companies from Marathon Oil Corp. to Weatherford International Plc have announced plans to raise about $9.2 billion in new equity, the most year-to-date since at least 1999, according to data compiled by Bloomberg. [emphasis added]

The article went on to add:

Until only a few weeks ago, bankers, executives and investors had assumed the capital markets were closed to the energy sector, which is laboring under oil prices that have fallen almost 70 percent from the summer of 2014. Then, in early January, a handful of companies with assets in the prized Permian Basin in Texas successfully tested the waters. Now “the window is clearly open” for almost everybody, Tudor, Pickering, Holt & Co. said.

When representatives of major world crude producing countries meet in Doha in April to discuss—without the U.S. E&P industry’s participation—a production freeze (on the way many of them hope eventually to production cutbacks), they will be unable to restore the pre-November 27, 2014 global crude order. In the emerging dog-eat-dog new market order, only the fittest producing countries will grow their crude industries and prosper, while the weakest will experience stagnating if not declining output. Furthermore, while low production costs will remain important, they will not be decisive: access to import markets and capital will be equally if not more important.

 

Comments are closed.

Top