Stubborn inventory both at home and abroad are giving analysts reason to believe that this could just be another "summer of cratering" for the oil and gas industry. Reports of increased Libyan production to 900,000 bbls/day, "it's highest level in four years", along with increased US production and high inventory levels have caused prices to return to the low $40's. This price is critical for many E&P companies here at home - as this is the breakeven for many regions throughout the states. Another telling sign? Oil futures have declined by 20% from January's high and entered into a bearish market. This may not cause an immediate reaction by oil & gas operators, but could create a significant impact for 2018 drilling schedules.
Vitality of Texas Oil & Gas Industry
Oil and gas has long been a key industry promoting economic growth nationwide - even globally. However, here in Texas, the industry has a significant impact on multiple factors from city/state revenue to overall employment. The uptick and seeming stability above $40/boe from last August has increased the nation's rig count and, in turn, production, employment, and growth. Nationwide, the Permian Basin out in the west of the state accounts for 40% of the total rig count and 55% of the industry's jobs nationwide. Over the past few months, the steady increase in rig count has increased jobs by 3,300 in the region with 72% of that being in the service sector. This growth, layered with higher priced production hedges and increased nation exports will allow the price of oil to continue to rise, at least through year end.
Everyone thinks new O&G formations are a thing of the past yet Continental Resources tests new Sycamore rock layer.
What an interesting finding up in the SCOOP - just when folks began to think the Woodford was the main storyline. Bravo to Continental and their diligent work in exploration in both the Mid-Continent and Bakken regions. By their dedication in proving out these leaseholds, both areas are able to reap the benefits of increased employment opportunities and more cash flow for local communities.