[Editor’s note: This story appears in the May 2020 edition of E&P. Subscribe to the magazine here.]
The cyclical nature of oil pricing is not a new nemesis for the petroleum industry. With every bust, there are promises to manage the next boom better, only to have those promises fall from memory as more distance is put between the good times and the bad.
But this time, the bust feels different. It is not just us.
Disruption has leveled all industries. Like the tall pine that bends when strong winds blow, so too will the aviation industry, the tourism industry, the petroleum industry and more. We are strong.
Usually, this time of year is a busy one for the oil patch. It is a time that would bring with it preparations for a busy drilling season and prayers for a quiet hurricane season. For most school children, the end of May signals the start of the summer break, family vacations and more. But then the double-gut punch that is the COVID-19 pandemic and the lowest oil prices ever recorded changed all of that.
Like many of you, Hart Energy staff has been working remotely for weeks, trying to make sense of it all, sharing our insights with you through countless emails, HartEnergy.com articles and webinars. One thing made clear is that disruption has touched us all.
It seems so long ago that our primary concerns were the shortage of a skilled labor workforce or U.S. presidential candidates and hydraulic fracturing bans. These still valid concerns went to the backburner, to be addressed after the COVID-19 crisis eases.
Opportunities, however, have emerged from the rubble of what was “normal.” They encourage us to look back and take stock of what worked and what didn’t, to fix what is broken and test what is new. The risk inherent with testing, be it a new play or unproven technology, scares off most. It is the gambler who takes the chance only to reap the rewards or suffer the consequences.
It was not without some irony that the Gambler himself, the late Kenny Rogers, cashed his chips in around the same time that the price of WTI dropped into the low $20s, only to dip below that mark a few days later before settling at sub-zero digits on April 20—the 10th anniversary of the Macondo tragedy.
It will take armies of risk-takers to capitalize on the disruption-fed opportunities. Let us all learn from the lessons of the bust and build a better tomorrow.
We are bent but not broken.
Denbury Resources and Penn Virginia mutually agreed to terminate their merger after the $1.7 billion cash-and-stock transaction faced difficult market conditions and shareholder opposition.
Murphy Oil plans to use proceeds from its Malaysia exit to PTTEP for share buybacks as well as funding Eagle Ford Shale and U.S. Gulf of Mexico operations.
The number of pipeline and storage terminal projects proposed to move shale to the U.S. Gulf Coast has dwindled amid steps by oil producers to pare exploration spending.