OIL PRICE CRASH

OIL PRICE CRASH

OIL PRICE CRASH forces Oil Exploration Companies into “Survival Mode”

As the Oil Price Crash leaving WTI hovering at the $55 range and Brent in the $60 range Oil Companies are re-vamping their 2015 Budgets and Exploration Plans. Many companies have already reduced their 2015 exploration plans by 30-50% to allow for the reduction of production profits caused by the tumbling Oil Prices. Some have forecasted that oil prices will remain low for up to two years and could possibly reach levels of $35 to $45 per barrel (http://business.financialpost.com/2014/11/28/canadian-natural-resources-chairman-sees-oil-touching-us35-a-barrel/?__lsa=08c3-a63d).

The OIL PRICE CRASH may have a negative affect on the survival of many companies and may lead to a wave of mergers to consolidate assets and costs. I believe the smaller, leaner Companies with cash on their Balance Sheets will be able to morph quicker, adapting to the lower Oil Price reality and possibly survive; while larger, employee laden companies cannot adapt as quickly and will have to reduce costs by laying off staff. Anyway you look at it, the next year or so will be a challenging time for the Oil & Gas industry.

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