Page 12





So how is your company going to cut costs in the face of falling oil prices? Is this a temporary blip on your radar screen or a new reality for oil and gas companies on both sides of the border? This past month, I spent more than a few hours with executives and operations contacts from companies in our Oilfield HUB online business community asking them these very questions. Naturally, most of these conversations started out with sharing our personal opinions on demand versus production levels, what got us here, and always ended in a very lively debate as to how long it will take before prices might recover to more favourable levels. This invariably also led to more solemn discus­ sions on what each of these companies were contemplating from a cost-cutting perspective to capital budgets and operations for the remainder of this year, and perhaps beyond. No one really wanted to speculate beyond 2015 fiscal budgets, as there


OilfieldPULSE | FEBRUARY 2015

seems to be a universal belief or, perhaps better put, a heck of a lot of hope that oil prices would inch back up to more sustainable levels as the year unfolds and, particularly into the early part of 2016. Thankfully, several of these companies have worked closely with their bankers and had some prudent hedging strategies and programs in place for a major portion of their production volumes. So the immediacy and need for serious cost-cutting measures is still a few months away. Kind of a wait and see attitude, while they trepidatiously watch the world stage play out in front of us all over the coming months. But that said, cost-cutting is now front and center on everyone’s mind. Slashing capital budgets, curtailing existing drilling programs, and potential staff/contractor reductions are all being contemplated or are already in motion. The next obvious cost-cutting focus then shifts to the service and supply companies who exploration and production companies rely upon for the lion’s share of their field operations. We have already heard some operators are taking an across the board approach with all of their preferred vendors. They are

Oilfield PULSE February 2015  
Oilfield PULSE February 2015