Official (Alberta) Oil Discussion Thread

[_Q_]

Would it not be fair to assume that with more work coming down the pipeline, service companies will be in greater demand soon? Would that not allow for them to charge more for their services?

Am I missing something?

[nik-]

Originally Posted by _Q_

Would it not be fair to assume that with more work coming down the pipeline, service companies will be in greater demand soon? Would that not allow for them to charge more for their services?

Am I missing something?

Only if the oil price really explodes. If it's sitting at this level or low 60's, efficient extraction is still likely to be the name of the game.

It's the race for limited resources to maximize production at high oil prices which balloons service company rates, we're still a ways from there.

But who knows, memories can be short.

[Lubicon]

Originally Posted by _Q_

Would it not be fair to assume that with more work coming down the pipeline, service companies will be in greater demand soon? Would that not allow for them to charge more for their services?

Am I missing something?

That would seem logical, but in my particular industry (drilling) there has been huge resistance to price increases. We are essentially working on a break even basis and that is only because we choose the work we bid on carefully. Some work is not worth bidding on and some we have walked away from as our costs were exceeding our revenue in some cases. Activity has definately picked up but prices have not followed suit to the same extent. At least in Canada.

[Muta]

Our receptionist just quit to take a lesser job back in oil and gas, so I'm assuming the double meat at Subway is back in the cards soon!

[JD]

Originally Posted by Lubicon

Activity has definately picked up but prices have not followed suit to the same extent. At least in Canada.

Same story in the Middle East... service companies are still basically breaking even except in some special projects and technology applications. And even those make only enough to offset the losses in basic services.

But these things take time and modest announcements like this one are the pebbles that can start an avalanche. I know 46 wells doesn't sound like much, but if you do the math, their planned yearly expenditures seem to be more than 46 wells x $11 million per well. Either they're open to drilling more if things go well or they're considering an increase in the cost of services as the years tick by.

[Ozy_Flame]

Originally Posted by Muta

Our receptionist just quit to take a lesser job back in oil and gas, so I'm assuming the double meat at Subway is back in the cards soon!

There are some that, no matter how up and down the industry may be, will always go back. It's just what they know. And they may come to find the grass isn't greener as they once thought.

And besides, there is probably someone better waiting to take her previous role in your company that can do a better job.

[Nufy]

Originally Posted by JD

Same story in the Middle East... service companies are still basically breaking even except in some special projects and technology applications. And even those make only enough to offset the losses in basic services.

But these things take time and modest announcements like this one are the pebbles that can start an avalanche. I know 46 wells doesn't sound like much, but if you do the math, their planned yearly expenditures seem to be more than 46 wells x $11 million per well. Either they're open to drilling more if things go well or they're considering an increase in the cost of services as the years tick by.

All those wells will need a gathering system...

Field Compression / dehy / amine / metering etc... as required.

That money will get used up pretty quick...

[burn_this_city]

What's a lesser job in O&G than a receptionist?

[VladtheImpaler]

Originally Posted by burn_this_city

What's a lesser job in O&G than a receptionist?

Sexretary?

[IliketoPuck]

Originally Posted by VladtheImpaler

Sexretary?

Believe it or not, I've looked at energy related commercial real estate space that had a stripper pole and a pull down cabinet bed in the CEO/president's office. This was well accentuated by the enormous mafioso style desk and private patio.

[Azure]

Originally Posted by nik-

Only if the oil price really explodes. If it's sitting at this level or low 60's, efficient extraction is still likely to be the name of the game.

It's the race for limited resources to maximize production at high oil prices which balloons service company rates, we're still a ways from there.

But who knows, memories can be short.

You mean memories will be short.

If oil gets over $75 everyone will have forgotten about efficiency.

[GP_Matt]

A lot of companies now are looking to lock in rates with service providers for longer terms. There are a bunch of RFP's looking for five year rate commitments.

Past RFPs were all about lower rates but no commitment.

[Muta]

Originally Posted by burn_this_city

What's a lesser job in O&G than a receptionist?

Beats me. But it's in O+G so it was a good decision regardless!

[GGG]

Originally Posted by Azure

You mean memories will be short.

If oil gets over $75 everyone will have forgotten about efficiency.

Please Lord give us one more boom so we can piss it away like the last one.

[Knalus]

Originally Posted by GGG

Please Lord give us one more boom so we can piss it away like the last one.

Oil is pretty much at $75 a barrel Canadian.

[burn_this_city]

Originally Posted by Muta

Beats me. But it's in O+G so it was a good decision regardless!

So its lesser because its in O&G. Gotcha.

[GGG]

Originally Posted by Knalus

Oil is pretty much at $75 a barrel Canadian.

Not quite the same as materials are priced in US dollars so a large portion of your Capital costs is still effectively in US dollars but most brownfield expansion is profitable at current rates.

The big problem with SAGD or mines for Greenfield projects is that they have such long payback period. The uncertainty around the future of oil really limits the investment time frame which makes designing a profitable project more difficult

[Hack&Lube]

Originally Posted by GGG

Not quite the same as materials are priced in US dollars so a large portion of your Capital costs is still effectively in US dollars but most brownfield expansion is profitable at current rates.

The big problem with SAGD or mines for Greenfield projects is that they have such long payback period. The uncertainty around the future of oil really limits the investment time frame which makes designing a profitable project more difficult

Also much of the oilsands and Alberta production is the lower value WCS which trades at a discount.

[nik-]

Originally Posted by Ozy_Flame

There are some that, no matter how up and down the industry may be, will always go back. It's just what they know. And they may come to find the grass isn't greener as they once thought.

And besides, there is probably someone better waiting to take her previous role in your company that can do a better job.

Are you consoling him because the receptionist quit?

[JFK]

Originally Posted by nik-

Are you consoling him because the receptionist quit?

lmao.. it was an oddly comforting and personal message about a secretary quitting.