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Message
re: Oil back below $40
Posted on 8/2/16 at 3:46 pm to lsufan31
Posted on 8/2/16 at 3:46 pm to lsufan31
Sorry but your brother couldn't be more wrong. Him and all the other shale oil drillers and producers are 100% responsible but want scape goats for their irresponsibility. Now they all want someone to feel sorry for them and ME to bail them out.
4 years ago when I left the U.S. market I begged friends to come overseas with me. Nobody was interstated and now they're almost all unemployed and begging me for a job.
Know your industry.
4 years ago when I left the U.S. market I begged friends to come overseas with me. Nobody was interstated and now they're almost all unemployed and begging me for a job.
Know your industry.
1
Posted on 8/2/16 at 3:52 pm to lsufan31
quote:
salaried individuals with >10 years of service are the first fat to be trimmed.
Lol so wrong. Who's going to fill the expertise gap?
Posted on 8/2/16 at 3:56 pm to redstick13
quote:
expertise gap?
They can actually hire a new college grad with more education than my brother, to fill his position....and pay them less money. My brother had >10 years of service to the same employer, 20+ years of experience in the industry. Making >150k, plus an average of 25k in bonus money each year. Someone right out of college would do the same job for a lot less money.
Posted on 8/2/16 at 3:57 pm to abitabrewed4LSU
quote:
If they were truely invaluable, they wouldn't have been cut.
There is no one invaluable in that industry. There are people graduating with engineering degrees every year who can replace those individuals for half the price.
Posted on 8/2/16 at 3:57 pm to lsufan31
quote:
However, I do know that corporate greed cost my brother (and a few more folks in the industry) their jobs. When profit margins are not high enough, at whatever dollar amount gas is going for, salaried individuals with >10 years of service are the first fat to be trimmed.
I understand your bias, but it isn't corporate greed, it is a fiduciary responsibility to shareholders. Your brother didn't get let go because they were trimming fat, he got let go because there was nothing for him to do so they didn't need him. These companies don't focus on layoffs as the first option. They make long-term strategic decisions that often result in layoffs, but they're a byproduct of a larger decision, such as cutting cap-ex which is 100% what a company should be doing.
Posted on 8/2/16 at 4:02 pm to lsufan31
quote:
Someone right out of college would do the same job for a lot less money.
Sounds like his employer made a smart business move.
Posted on 8/2/16 at 4:02 pm to slackster
How much of this was funny money/betting? I know people putting money into these plays aren't projecting losers, but there also does seem like some gold rush aspect of it. Sorry for the doom, but I like Clusterfrick Nation's big picture analysis sometimes.
LINK
quote:
The truth is the shale oil industry couldn’t make a profit at $100/barrel. The drilling and fracking boom that began around 2005 was paid for with high-risk, high-yield junk bond financing and other sketchy, poorly collateralized financing. Most of the earnings in the early years of shale oil came from flipping land leases to greater fools. Now that the price of oil has fallen by more than 50 percent in the past year, the prospect dims for that junk financing to be repaid. Since that was “bottom-of-the-barrel” financing, the odds are that the shale producers will have a very hard time finding more borrowed money to keep up the relentless pace of drilling needed to stay ahead of the short depletion rates. They are also running out “sweet spots” that are worth drilling.
We will look back on the shale oil frenzy of 2005 to 2015 as a very interesting industrial stunt borne of desperation. It gave a floundering industry something to do with all its equipment and its trained personnel, and it gave wishful hucksters something to wish for, but it never penciled-out economically. Shale oil production turned down in 2015 and the money will not be there to get the production back to where it was before the price crash. Ever.
Some additional uncomfortable truths should temper the manic fantasies of hypsters like Mauldin. One is that we are no longer in the cheap oil age. All the new oil available now is expensive oil — whether it’s Bakken shale or deep water or arctic oil — and it costs too much for our techno-industrial society to run on. That is why the world financial system is imploding: we can’t borrow enough money from the future to keep this game going, and we can’t pay back the money we’ve already borrowed. We have to get another game going, one consistent with contraction and with much lower energy use. But that is not an acceptable option to the people running things. They are determined to keep the current matrix of rackets going at all costs, and the certain result will be very messy collapse of economies and governments.
Industrial economies face a fatal predicament: Oil above $75/barrel crushes economies; under $75/barrel it crushes oil companies. We’ve oscillated back and forth between those conditions since 2005. The net effect in the USA is that the middle class is rapidly going broke. All the financial shenanigans aimed at propping up Wall Street and Potemkin stock markets was carried out at the expense of the middle class, now deprived of jobs, incomes, vocations, stability, and prospects. They may already be at the point where they can’t afford oil at any price. That “energy deflation” dynamic, in the words of Steve Ludlum at the Economic Undertow blog, is a self-reinforcing feedback loop that beats a path straight to epochal paradigm shift: get smaller, get local, get real, or get out.
LINK
Posted on 8/2/16 at 4:06 pm to lsufan31
quote:
There is no one invaluable in that industry. There are people graduating with engineering degrees every year who can replace those individuals for half the price
There are many invaluable employees in the industry, it is just rare for them to be engineers and such, they are the easiest to replace.
Right now the experienced tech guys are way more valuable than engineers that are a dime a dozen.
Posted on 8/2/16 at 4:25 pm to cave canem
Key is on experience. Engineers are a dime a dozen right now. The people who have both the real world experience and the education are most in demand. We are being fast tracked into management at a furious pace.
Posted on 8/2/16 at 4:33 pm to redstick13
Yep, but experience and performance are trumping education as they should.
Posted on 8/2/16 at 4:38 pm to cave canem
Now a $1.63 instead of $1.68. Money staying in the bank.
Posted on 8/2/16 at 4:50 pm to LSUDAN1
Congrats, I'm sure the two bucks you saved doubled the ole portfolio.
What line of work are you in?
What line of work are you in?
Posted on 8/2/16 at 5:00 pm to cave canem
I work in a field that where the more gas that is sold the better which is what is happening right now.
This post was edited on 8/2/16 at 5:02 pm
Posted on 8/2/16 at 5:48 pm to LSUDAN1
"There are people graduating with engineering degrees every year who can replace those individuals for half the price."
I’m not trying to be rude, but that is an ignorant statement. The plug and place theory doesn’t always apply to skilled labor. Not sure if you are aware, but there are different types of petroleum engineers and geologists with different sub specialties.
Given the cost of projects, environmental and safety risks, a good seasoned engineer will save you from potentially horrible and costly mistakes and will create value. Engineers out of any university are not prepared to replace a seasoned engineer. I don’t know of any oil and gas company that would replace a high performing seasoned engineer with a college grad to reduce salary.
Just for a frame of reference, a horizontal well with cost you $4-10 MM each. If you drill and complete 12 wells you are at $48-$120 MM capital budget not including anything else. That extra $100K in salary can disappear pretty quickly with a mistake. Overhead is essentially low per $/spent compared to other industries.
That being said, everyone is replaceable. Its just not going to be an entry level or early career engineer. Look at the PetE departments around the country. If the original statement was true, they would all be hired. In fact, their job placement % was the lowest since the 80's. I saw a graph in a presentation, but I don't recall the exact numbers.
I’m not trying to be rude, but that is an ignorant statement. The plug and place theory doesn’t always apply to skilled labor. Not sure if you are aware, but there are different types of petroleum engineers and geologists with different sub specialties.
Given the cost of projects, environmental and safety risks, a good seasoned engineer will save you from potentially horrible and costly mistakes and will create value. Engineers out of any university are not prepared to replace a seasoned engineer. I don’t know of any oil and gas company that would replace a high performing seasoned engineer with a college grad to reduce salary.
Just for a frame of reference, a horizontal well with cost you $4-10 MM each. If you drill and complete 12 wells you are at $48-$120 MM capital budget not including anything else. That extra $100K in salary can disappear pretty quickly with a mistake. Overhead is essentially low per $/spent compared to other industries.
That being said, everyone is replaceable. Its just not going to be an entry level or early career engineer. Look at the PetE departments around the country. If the original statement was true, they would all be hired. In fact, their job placement % was the lowest since the 80's. I saw a graph in a presentation, but I don't recall the exact numbers.
Posted on 8/2/16 at 6:59 pm to chauncey1
Chauncey is exactly right, add to that when you get to Deepwater the numbers he gave increase by a multiple of 10-15.
Posted on 8/3/16 at 7:25 am to chauncey1
quote:
I’m not trying to be rude, but that is an ignorant statement. The plug and place theory doesn’t always apply to skilled labor.
You obviously do not work in one of these offices in down town New Orleans, or you would know what has been happening there for the last year. They are forcing people in to retirement, a lot of people.
quote:
I don’t know of any oil and gas company that would replace a high performing seasoned engineer with a college grad to reduce salary
I'm just speaking from personal experience.
quote:
a horizontal well with cost you $4-10 MM each. If you drill and complete 12 wells you are at $48-$120
He also didn't work in E&P, so I don't know what drilling costs has to do with anything.
Posted on 8/3/16 at 9:59 am to lsufan31
"You obviously do not work in one of these offices in down town New Orleans, or you would know what has been happening there for the last year. They are forcing people in to retirement, a lot of people."
- Forcing people into retirement is not the same thing as hiring recent graduates to replace them.
-Companies were/are overstaffed for the volume of work they are projecting going forward. Companies, particularly on land based operations, staffed up during the "shale land grab". There was a lack of skilled labor to perform the work needed in a given window and salaries more than doubled due to demand.
-Most companies tried to hold on to staff, but as reality hit, they could not support a staff that didn't have any work. When determining who to let go he majority of early cuts were low performers and non-essential roles (ability to contract or outsource and duplication of roles). The more recent cuts have been cutting into the meat or even the bone and will be to the detriment to some companies. But hard decisions have to be made. This may sound cruel, but the downturn will provide companies to become more efficient and high grade staff.
-One effect of the bust in the 80’s is that young talent left or never entered the oil field. This created an age gap that exists in 35-55 year olds now. The industry is aware that the senior level staff will be retiring and will need to replace them. This is has been dubbed “the great crew change”. That being said, most companies have ceased or reduced hiring new graduates.
"I'm just speaking from personal experience."
-Really it's your brothers experience and you don't know all the facts. You're obviously not in the industry and going off hearsay.
“He also didn't work in E&P, so I don't know what drilling costs has to do with anything.”
-I’m not sure what you are trying to say here… Drilling and completing wells are at the core of the industry. The service side carries out the work. Both sides are essential to completing the project. One is paying and the other is billing.
- Forcing people into retirement is not the same thing as hiring recent graduates to replace them.
-Companies were/are overstaffed for the volume of work they are projecting going forward. Companies, particularly on land based operations, staffed up during the "shale land grab". There was a lack of skilled labor to perform the work needed in a given window and salaries more than doubled due to demand.
-Most companies tried to hold on to staff, but as reality hit, they could not support a staff that didn't have any work. When determining who to let go he majority of early cuts were low performers and non-essential roles (ability to contract or outsource and duplication of roles). The more recent cuts have been cutting into the meat or even the bone and will be to the detriment to some companies. But hard decisions have to be made. This may sound cruel, but the downturn will provide companies to become more efficient and high grade staff.
-One effect of the bust in the 80’s is that young talent left or never entered the oil field. This created an age gap that exists in 35-55 year olds now. The industry is aware that the senior level staff will be retiring and will need to replace them. This is has been dubbed “the great crew change”. That being said, most companies have ceased or reduced hiring new graduates.
"I'm just speaking from personal experience."
-Really it's your brothers experience and you don't know all the facts. You're obviously not in the industry and going off hearsay.
“He also didn't work in E&P, so I don't know what drilling costs has to do with anything.”
-I’m not sure what you are trying to say here… Drilling and completing wells are at the core of the industry. The service side carries out the work. Both sides are essential to completing the project. One is paying and the other is billing.
This post was edited on 8/3/16 at 10:03 am
Posted on 8/3/16 at 10:16 am to chauncey1
quote:
Really it's your brothers experience and you don't know all the facts
Really, you think that my brother just made shite up? I don't know all the facts? I know everything that went down in my brothers case and for some of his co-workers. Right down to the shady "random" hair follicle tests. You're obviously just trolling for an argument.
Posted on 8/3/16 at 10:33 am to LCA131
FDIC guarantees deposits up to $250K per depositor if the bank is forced to liquidate. (Though I saw somewhere where you could structure multiple accounts in such a way as to get more than that.)
However, bank liquidations (where the bank actually ceases operations and acts like a closed retailer) are actually rare. What usually happens is that FDIC already knows that a bank is in trouble and has an acquiring bank lined up to purchase it. Nearly always the acquiring bank agrees to accept all existing deposits of the troubled bank (to keep a happy customer base) but, in return, gets FDIC to keep the loans it doesn't want.
However, bank liquidations (where the bank actually ceases operations and acts like a closed retailer) are actually rare. What usually happens is that FDIC already knows that a bank is in trouble and has an acquiring bank lined up to purchase it. Nearly always the acquiring bank agrees to accept all existing deposits of the troubled bank (to keep a happy customer base) but, in return, gets FDIC to keep the loans it doesn't want.
Posted on 8/3/16 at 11:02 am to ksayetiger
quote:
Gas prices have little to do with oil prices
wat
Please explain how in the mid 90s oil was around 50, yet gas was near a dollar a gallon. Yet now, at 40 a barrel gas is double?
lol u dum
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