Oil and Gas Industry Well-positioned if Recession Hits

M&A deals may be smaller and growth constrained, but capital discipline has positioned oil and gas companies on firmer ground to endure a downturn, experts tell Hart Energy.

How long will these high prices last? And how long will inflation remain high? And what is the best way to add production in this regulatory environment? Oil and gas industry experts weigh in. (Source: Hart Energy photo illustration; Artit Wongpradu, Corona Borealis Studio/Shutterstock.com)

Wary oil and gas executives prepare for a recession as they grapple with inflation and struggle to hire. They hold firm to capital discipline despite the siren call for growth emanating from the triple-digit price of WTI. And they navigate a rocky M&A terrain with more deals of lesser value, steering away from blockbusters.

Welcome to midyear 2022 in the age of contradictions.

There’s plenty of data, but no certain knowledge about what is to come; high oil prices that bring the industry grief may not be high enough to balance the market; and energy investors are finally getting their paydays in the midst of an equity market downturn.

Could oil reach $145/bbl again, as it did in July 2008? Sure, and it could close at -$37/bbl again, as it did in April 2020. The -$37/bbl close was a one-time affair, but miserable-for-longer is always a possibility.

For example, the $145.31/bbl close just before the July 4, 2008, holiday morphed into a price of $30.28/bbl just two days before Christmas 2008. Another example: the tumble from a peak of $108.23 in September 2013 to $44.08/bbl in January 2015. And another example … well, best not to dwell.

But keep this in mind: 2022 is not 2008. A lot has changed.

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Joseph Markman

Joseph Markman, senior editor for Hart Energy, covers markets and provides data analysis for all Hart Energy editorial products.