Now that everyone has settled back into their seats after the holidays, it is important to spend some time reflecting on the year that has passed while determining its implications for the year ahead.

Of course, 2008 was hectic and can hardly be summed up as business as usual. From a normal start to a raucous rise in mid-summer, the oil and gas business soared through the first half of the year. By November, we were looking at possible collapse. From best to worst case scenarios, a third party perspective can be helpful to delineate exactly what went on during 2008, and how it will most likely play out in 2009.

Lucky for us (or me I should say), Allen Brooks, Managing Director of Parks, Paton, Hoepfl & Brown Energy Investment Banking LP, has put together a common thread of the financial developments that took place during the year. Published as “Musings from the Oilpatch,” the document provides a decent narrative for the preconditions of the housing market crisis and its links to stock market that inevitably had a grand effect on the energy industry over the Q3 and Q4 of 2008.

In addition, it provides a general outlook for the coming year that’s as gloomy as the evening news wants you to believe. Most importantly, Brooks points out that oil prices will most likely trade at $50 to $60 per barrel with some excursions throughout 2009. Rig count is expected to drop 500 to 600 from yearend 2008.

The report states that oil and gas service company stocks should remain somewhat stable with time and possibly an upturn in the oil and gas prices providing a catalyst for recovery. It also points out that geology is the key factor for now. “It is our belief that the geology is the key factor that is different this time. The production depletion rate, which appears to be climbing, will be our long-term earnings and stock price driver. While it is hard to imagine now, just like last year at this time, 2009 is likely to be another surprising year!”

The full report is helpful in identifying the most important factors related to our current economic situation. To access Allen Brooks’ newsletter, which provides much more detail than I have hear visit (See “Musings from the Oilpatch” January 6).