The economical slowdown has certainly started to impact the Oil and Gas Industry. Some small companies have been through receivership, like OilExco, although their prospects and reserves look promising. They are just short of cash, for two reasons:
- Oil price has dropped minimising the revenues and the cash available to be injected in new projects
- Loan by banks are currently more difficult if not impossible to get. Those companies rely on the credit to almost entirely finance their projects
For OilExco more specifically, an unexpected long-term shut-down of one of their platform has contributed to severely impact their revenues
All other the places project budgets are cut, and studies are differed. "Small" players, like Talisman, have also started to get rid of some of their contractors because most of the projects have been suspended. Three months ago oil companies were starving for resources and prepared to pay silly money to get a contractors to do some few calks. This is one example among others.
Unfortunately for those companies that are cash constrained, it is probably a good time to invest now and the big players are doing so. Those large Oil Companies cut some projects but in average their investment spending in the current climate remain enormous. Probably because they have been through similar crisis in the past with low oil price and they have slashed recruitment and training of personals (which explains the current shortage of engineering skills). Apparently the lessons have been learnt, which is good.
Investments have to be made now because any new development that is being studied from scratch today will start to pay from 2013 onwards at the earliest. And 2014 is a more realistic target of when the fields could start to produce. By 2014 demand might laregly excceed the supply for ol and gas, hence pushing Oil price very high.
Rig rates will certainly drop in the next couple of weeks (keep in mind that drilling rig rates have been through the roof in the last couple of years because every oil companies had a field to explore or produce). Rig rates have jumped to 350 or even £450,000 per day. Now the drilling programs are reduced if not cut and this should significantly help reducing the overall drilling costs.
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Posted by: Christian Louboutin Outlet | September 13, 2011 at 04:39 AM