And there was much rejoicing in the land.... Gas Prices

[Ruffdaddy]

That means its working snatch. They want to get rid of the Lazies and not have to pay to do so.

[Baron Von Crowder]

That means its working snatch. They want to get rid of the Lazies and not have to pay to do so.

Isnt that what the rest of the world calls "good business"?

[Ruffdaddy]

Isnt that what the rest of the world calls "good business"?

Lol...the rest of the third world maybe. Check out some of the French, Norwegian and Denmark labor laws and you'll wonder wtf is wrong with us in america.

[KBScobravert]

That means its working snatch. They want to get rid of the Lazies and not have to pay to do so.

I watched as they started giving 4 hours a day for only 5 days a week to guys on my old crew. Wasn't a "these guys are lazy, starve them out" thing. Some of these guys were good dudes that ended up quitting real fast. Fact is that they didn't have work for them. The company repeated over and over "we are not in layoffs" but couldn't even find work for them to do to get 40hrs a week.

I landed with 2 different group of guys on the same crew when my original crew got put in the yard. So I lucked out. Both sets of guys tried to keep me and the last set of days won.

[Strychnine]

More random shit.

War, hedge funds and China: why oil will hit $100 a barrel

Oil prices are heading higher and could soon return to $100 per barrel as war in the Middle East and speculators drive market

It wouldn’t be the first time that oil experts have got it spectacularly wrong when predicting the price of crude.

Goldman Sachs went against the prevailing mood in 2008 when it famously predicted that crude would hit $200 per barrel within months. Instead, oil crashed to levels around $40 per barrel as the global financial crisis punctured world demand.

This time around, the US investment bank decided to follow the consensus view on Wall Street when earlier this year it downgraded its short-term forecast for the price of a barrel to around $40 per barrel.

But instead of falling, oil has rallied strongly. Brent crude now trading above $63 per barrel is up 36pc since reaching its year low in early January. At this rate oil will be back at $100 per barrel by the end of the summer driving season in the US when middle-class America hits the great open roads to visit their ‘Aunt Agatha’ in Pennsylvania.

So why has the short-term outlook for oil changed overnight?

Lower prices have started to filter through to boosting growth in the world’s most advanced economies and with it demand for gasoline, which is once again on the rise.


Here are six reasons why oil is heading back to $100:

The market is tighter than you think: World demand for crude oil is beginning to rebound. After growth in consumption slowed last year the early signs are that demand is beginning to pick up led by developed markets that are responding to a period of lower prices. The Organisation of Petroleum Exporting Countries (Opec) expects demand for oil to grow by 1.17m barrels per day (bpd) in 2015 but this is a conservative estimate. Another 500,000 bpd of crude would erase the current 1.5m bpd surplus in the market. Remove this tight surplus and oil is back above $100 in a heartbeat.




War in the Middle East threatens supply: Gulf countries, which account for a fifth of the world’s oil supplies, are under siege. In Yemen, a shaky Saudi-led coalition is battling to turn the tide on Iranian-backed Houthi rebels with airstrikes. Abdel-Malik al-Houthi, leader of the rebels who are the brink of seizing Aden, is already being described by Iranian media as the “supreme leader of the Arabian peninsula. In the north, Islamic State continues to pose a threat to the Gulf in Iraq. The region, which controls most of the world’s oil is in turmoil and any further escalation in conflict could easily push crude back to $100 per barrel and beyond.

Hedge funds are betting on oil: The vultures of global markets smell a killing and have started to turn bullish once again on oil heading back to $100. Investors have increased their net-long position on West Texas Intermediate (WTI) crude by more than 9pc in the first few weeks of April as the number of traders still betting on a further price collapse dwindles. Oil traders are beginning to turn bullish, which has already pumped up WTI by 36pc in the last six months.




China to unleash massive stimulus: The leaders of the world’s second-largest economy and biggest importer of crude have finally woken up to the dangers of a potentially catastrophic slowdown. The People’s Bank of China started the week by pushing more money into the system by cutting the amount of money that lenders must hold against reserves. Crude oil immediately responded. China will account for roughly two-thirds of Opec’s forecast increase in demand this year and a major push by Beijing to revive growth could easily push oil back above $100.




Barbarians at the gate: Royal Dutch Shell’s game-changing £47bn bid to buy BG Group is a good sign that ‘big oil’ sense that prices could once again be about to turn back towards $100. No one wants to catch a falling knife and Shell have obviously timed their move just at the point when crude prices have started to turn. More takeovers in the industry are expected with BP persistently linked as a target for Exxon Mobil. Such deals would also drag more free cash away from investment into drilling new oil wells and expanding capacity, which eventually can lead to demand outstripping supply.

America’s shale oil revolution is over: The number of rigs working in US oil fields has fallen for a record 19th straight week as drillers continue to cut back in response to the lower prices of the last six months. Although, US oil production if expected to reach a record 9.65m bpd average in 2015 this could represent the high watermark for the industry in North America. Shale oil needs prices above $100 per barrel to grow.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11549582/War-hedge-funds-and-China-why-oil-will-hit-100-a-barrel.html

[bluecollar]

On a side note.... all of you oil folk who are now in need of some cash, come see me at the pawn shop! heh.

[Denny]

On a side note.... all of you oil folk who are now in need of some cash, come see me at the pawn shop! heh.

Nice!

[slow99]

More random shit.

Fucking hedge funds.

[Snatch Napkin]

That means its working snatch. They want to get rid of the Lazies and not have to pay to do so.

Normally, I would agree with you.

However, there are several grey hats in every camp I've visited that should have been culled years ago.

These are the type of supervisors that refuse to assess your progress in fear of losing their job to a go-getter.

I've never been a fan of the corporate world, but the chaotic mixup of suits and hammer unions that I've experienced here are levels above the bullshit that I've experienced before.

[Strychnine]

Baker / Halliburton stuff from the quarterly calls this week:



Baker Hughes

"During the first quarter we took necessary actions to reduce our cost base and resize our footprint to mitigate current market conditions. These actions include the closure and consolidation of approximately 140 facilities worldwide along with the idling or impairment of excess assets and inventory. Correspondingly, we made the decision to increase our headcount reductions to a total of approximately 10,500 positions, or 17% of our workforce, which is 3,500 positions higher than what we previously announced. Combined, these actions are projected to reduce cost by more than $700 million on an annualized basis.

"In addition to lower activity levels, strained capital budgets have prompted customers to decrease their spending per well including a reduced appetite for premium services. As day rates for drilling rigs have fallen sharply, so has the demand for high technology products, which are engineered to reduce the time to drill and complete a well. In the United States, some customers are electing to defer completions altogether, and we estimate that as many as 20% of the recent wells being drilled have been placed in inventory to be completed at a later date. Although we believe this customer reaction is transitory, the reduced consumption per well has contributed to the oversupply of our industry leading to an unfavorable pricing environment.

More info: http://phx.corporate-ir.net/phoenix....180&highlight=


Halliburton

In our view, this call came at a defining moment for Halliburton. The company is simultaneously dealing with two historical firsts: the biggest acquisition in oil service history and the sharpest collapse in the history of its core market, North America.

Halliburton has the best track record in the business at managing downturns like this, yet there has never been more pressure to execute. Under this pressure, management's commentary on the call was poised and direct. The company's playbook for this critical time is set, and we wouldn't bet against it.

Our top 5 big picture takeaways from President Jeff Miller's commentary are below, followed by a round-up of interesting market insights dropped on the call.

1. Halliburton Lay-offs Tracking Below Average, But Baker Hughes To Cut Much Deeper

Reading between the lines of this critically important statement on the call, Halliburton's early work on the integration must suggest that the $2bn of expected deal synergies can best be achieved by wrapping Baker's core products around Halliburton's delivery system. This means that lay-offs at Baker Hughes could ultimately prove to be much deeper than previously thought, while Halliburton's staff will be more buffered as the market bottoms


2. Dealing With The Oil Service Downturn - 3 Strategy Buckets

What is not unique about this downturn is that customer, service company, and supplier behavior is pretty much as you would expect. What is unique about this downturn is the speed at which this happening. Halliburton sees its competitors' reactions falling into three buckets: 1) some are still running their businesses to make a profit and returns for their investors, 2) some are working at a price which covers only their cash costs, and 3) some have decided that covering fixed costs is no longer important and will operate at a loss to keep equipment busy. The point here is that buckets 2 and 3 are not sustainable business models. Absent a v-shaped recovery, companies in these latter two buckets will either be absorbed or forced out of the market, leading to capacity reduction.


3. Playing Offense But Not With Reckless Abandon

Halliburton is playing offense at this point in the cycle, defending market share with key customers and focusing on maintaining the utilization of deployed assets. When Halliburton plays for share in a weak market, it is hard for some weaker competitors to stay in business - Halliburton's size and quality mean that a market share play can crush some smaller peers. This is something we've seen from Halliburton in prior cycles, and one of the reasons the organization is so strong today. That being said, management did note that where price concessions have fallen below acceptable return thresholds, they are stacking equipment including frac spreads. This goes back to the 3 strategy buckets: given the unsustainable prices Halliburton is seeing from some peers, they would rather save their equipment for better times in some cases. We may see the company become more aggressive before the end of the cycle.

4. 4,000 DUCs & Counting

The trend of drilled but uncompleted wells (DUCs) has been a hot topic around the industry of late. Halliburton cited 3rd party studies that quantify the number of DUCs in the US at around 4,000. Halliburton views this fracklog as deferred revenue, and a phenomenon that will tighten their market very quickly when the market does recover - a view we'd agree with. But in the meantime, that's alot of stages that aren't being frac'ed, and Halliburton has no visibility on timing (completions will follow oil price recovery). Two interesting notes though: i) only a limited subset of operators can even afford to talk about drilled but uncompleted wells and ii) the industry's DUC backlog to this point is only about 7% of the total wells drilled last year.


5. Investing In North American Optionality

Halliburton is continuing to invest in unconventional technology like Frac of the Future through the cycle. Jeff Miller's closing comment from his prepared remarks bears repeating here in its entirety:

"Further, it's our view that North America will continue to be the most adaptable market in terms of addressing well economics through both efficiency models and technology uptake. One way to look at it is that the U.S. unconventional business is now the lowest-cost, fastest-to-market incremental barrel of oil available in the world today. One thing we've helped our unconventional customers prove over the years is that they're smart, technically savvy and very adaptable companies, and I'm confident that this type of market will show that again. As a result, we believe that when the recovery does come, North America will respond the quickest and offer the greatest upside, and that Halliburton will be best positioned to lead the way. We've been through these cycles before. We know what to do and we'll execute on that experience." ~Jeff Miller, President at Halliburton

Market Intelligence Round-up

In addition to our top 5 takeaways above, management dropped knowledge on some other interesting market trends. Here are a few nuggets from the call that we found interesting:

• E&Ps are myopically focused on reducing oilfield service prices right now - Halliburton is seeing substantial pricing pressure across all PSLs.
• Management noted that historically, its taken 3 quarters peak to trough for rig count to stabilize. We are falling much faster this time (it has been almost 2 quarters), and declines are slowing, but rig count must stabilize before the oil service market can heal.
• Vendors that sell to oilfield service companies are starting to realize how tough the market is and are making pricing concessions.
• Halliburton is looking to consolidate its vendor list into fewer companies so that it can commit more volume to each and thus receive discounts going forward. This is an interesting defensive move as more suppliers generally creates competitive advantage in a stable or growing market.
• Internationally, Halliburton sees the Middle East and Asia markets as the most stable while Malaysia, Australia, Europe, Russia, Angola, and Mexico were singled out as country markets with significant risk of slowing down. Halliburton reminded us that international pricing never fully recovered from the 2008 downturn, so there is less fat to trim (we're sure they are reminding their customers of the same).
• Tax rates for global oilfield companies dropping. This is because earnings from North America (higher tax rate) are falling much faster than international work. So the mix shift means companies have to pay less of their earnings to the tax man. Halliburton's tax rate was down about 100bps y/y for 1Q15 to 26%.
• Total pressure pumping volumes are down y/y, but volume per well is up 12% sequentially, which means the equipment working is working harder than it ever has. This means that stacked equipment will start to be cannibalized to replace frac spreads that are still working - the oversupplied market will eventually correct itself.
• Baker Hughes Update: $2bn synergy estimate was maintained, deal on track to close 2H15, integration planning well underway so that it can begin the day the deal closes, interest in divestiture candidates is coming from potential buyers inside and outside the industry.

Short term takeaway : say a little prayer for any friends you have at Baker.

[Strychnine]

"Half of the 41 fracing companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies. There could be about 20 companies left that provide hydraulic fracturing services."

- Rob Fulks, pressure pumping marketing director at Weatherford

[Sean88gt]

"Half of the 41 fracing companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies. There could be about 20 companies left that provide hydraulic fracturing services."

- Rob Fulks, pressure pumping marketing director at Weatherford

I really wish I had the cash to buy equipment over the next 6 months. Once oil rebounds, you'll have a host of new companies jumping back into the fray.

[Strychnine]

The latest Simmons Intl report just said that there were 283 new workover rigs built for / sold in the US market last year. This year the expectation is 45.

16% of last year's number.

[Strychnine]

Also just learned that Key Energy idled their KTC facility in Midland last week (40-50 jobs?), so they will certainly not be manufacturing any workover rigs this year. At full capacity that facility could crank around around two workover rigs per week.

[Strychnine]

Feb 5, 2015

Weatherford cutting 5000 starting today, with another 3000 likely after that. 85% are expected to be North American cuts.

Outside of those 5000-8000 they are also offering a "Voluntary Separation Opportunity Program"

With Weatherford's cuts, the Big 4 oil service firms have announced about 30,000 lay-offs in the first 35 days of 2015. And all have signaled more cuts are coming.

Today

Weatherford raises job cuts target to 10,000

HOUSTON -- Weatherford has increased its workforce reduction target to 10,000 people, the service provider said Wednesday as it announced its first quarter results.

The company had previously announced that its workforce would be reduced by 8,000 people. But news of the increase, which will mainly be accounted for by personnel in North America, came as the company announced a 22% drop in year-on-year first quarter revenue.

The company cut 6,449 positions by the end of the first quarter, and the remaining cuts will be completed by the end of the second quarter, Weatherford said. The company employed 56,000 people at the start of the year.

Weatherford is planning to shut down seven manufacturing facilities this year. Of these, two were closed in the first quarter with four more planned for the second quarter and the seventh being targeted for closure in the third quarter.

In addition, the company is planning to shut down and consolidate 60 operating facilities across North America by the end of the year, the company said.