I'm told the Worley contractor rate cut was 10%
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Oil and gas sector - IR35
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At least 500 redundancies at Enquest:
Coronavirus: EnQuest warns of more than 500 North Sea redundancies - BBC News
They're surely on a sticky wicket. $1.4bn in debt and losing money on every bbl they produce.
I'm told realised prices for brent have widened to around $5/bbl below spot in part due to floating storage limitations.
oh and Shell cut their divvy for the first time since WW2. Be surprised if BP doesn't follow suit.Comment
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It shouldn't take long to stop all production right? Every single offshore rig will be bringing in losses at this point in time and I can't see a huge improvement in the next few months.
What's gas like vs oil?Comment
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Originally posted by dsc View PostWhat's gas like vs oil?
HTH'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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Originally posted by dsc View PostIt shouldn't take long to stop all production right? Every single offshore rig will be bringing in losses at this point in time and I can't see a huge improvement in the next few months.
What's gas like vs oil?
What I mean is that these prices are too low to cover costs for the majority of north sea fields. Some can just about wash their faces at these prices on an opex basis but throw in capex requirements and most if not all are losing money. Most have a portion of their production hedged at higher prices which is helping but shutting down production exacerbates the problem as their only source of cash reduces further.
The 'negative' price headlines were particular to the US onshore crude which is normally delivered at a tank farm in Cushing Oklahoma (the pipeline crossroads of the US) and uses WTI as it's benchmark as opposed to Brent in the north sea. The negative price situation arose due to lack of storage capacity the particulars of the WTI futures market and arguably a lot of dumb money piling into the USO oil ETF.
As for gas, its about 13p/therm - multi-decade lows.Comment
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I meant actually stopping production not ESDing the rigs
I know that they already sold the stuff they are pumping out at higher prices, but I can't see the point of pumping out more if they can only shift it at less than what it takes to get it out of the ground. Maybe reduce production for a start at which point you probably don't need as many people or wells running?
As for gas
Ah and helpful as always NLUKComment
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Generally it doesn't make sense because such a large proportion of your costs are fixed i.e. inherent in the operation of an offshore oil and gas facility. Plus your lenders tend not to like it as you can't service your debts. Rather produce something at a loss than produce less at more of a loss. Also most operators will still be getting $50/bbl+ for a portion of their production as most are hedged at higher prices. If low prices persist (i.e. if demand is still depressed into next year) and these hedges expire - things will get much more difficult.
Some operators like Conoco are reducing output from their higher cost, marginal wells which can be restarted easily but for most companies, they'll stop drilling, suspend/cull projects, cut operating costs where they can and hunker down.
There are some techincal challenges with shutting in wells completely. Unconventional "tight" reservoirs don't like it. Neither do some of the high wax/asphaltine fields in the north sea.Last edited by sludgesurfer; 1 May 2020, 08:15.Comment
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Originally posted by sludgesurfer View PostGenerally it doesn't make sense because such a large proportion of your costs are fixed i.e. inherent in the operation of an offshore oil and gas facility. Plus your lenders tend not to like it as you can't service your debts. Rather produce something at a loss than produce less at more of a loss. Also most operators will still be getting $50/bbl+ for a portion of their production as most are hedged at higher prices. If low prices persist (i.e. if demand is still depressed into next year) and these hedges expire - things will get much more difficult.
Some operators like Conoco are reducing output from their higher cost, marginal wells which can be restarted easily but for most companies, they'll stop drilling, suspend/cull projects, cut operating costs where they can and hunker down.
There are some techincal challenges with shutting in wells completely. Unconventional "tight" reservoirs don't like it. Neither do some of the high wax/asphaltine fields in the north sea.
Worked on another project where the BP platform performed a shutdown to tie in an additional well - oil and gas - and this required the existing oil well to be shut in. Unfortunately the existing well was left too long and didnt restart as the pressure had declined so much. Much consternation and the new wells had to be reconfigured as the startup well.
Long story short, not good news to stop production.
Long term is that the next few months may see -ve oil prices again. Collapsed demand, storage filling rapidly. Its likely that in the north sea we may see lots of fields stopped, and never restarted.Comment
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Present (not UK) operating company I am in has announced both CAPEX and OPEX reductions of 30% for 2020. Doesn't look good for temporary workers and I expect older staff guys to be asked if they fancy doing a bit more gardening. Things never really recovered after 2014/15. There aren't enough people to do anything properly today. Goodness knows how things will be after the inevitable night of the long knives. We already had one in June 2019 and another even more severe one seems inevtable.Public Service Posting by the BBC - Bloggs Bulls**t Corp.
Officially CUK certified - Thick as f**k.Comment
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Originally posted by Fred Bloggs View PostPresent (not UK) operating company I am in has announced both CAPEX and OPEX reductions of 30% for 2020. Doesn't look good for temporary workers and I expect older staff guys to be asked if they fancy doing a bit more gardening. Things never really recovered after 2014/15. There aren't enough people to do anything properly today. Goodness knows how things will be after the inevitable night of the long knives. We already had one in June 2019 and another even more severe one seems inevtable.
More generally, after the last crash and huge cull I saw a lot of good people (30s, well educated and lots of experience) decide that it was a time for a change and they made their move into other industries (pharma, defence, manufacturing) as soon as they could. I moved out of what I did into another specialism that was more industry agnostic and have recently starting working outside of oil for the first time in a decade. The main thing the oil game had was that the money was really good, from what I'm experiencing elsewhere, you can get the same if you have the right skills or are willing to get them.
It's hard to see anything but large sustained contraction, with terrible repercussions for a lot of people and for Aberdeen's economy. Good when it lasted right enough!Comment
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