WORKBOAT GOM INDICATORS
Energy Level
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APR. '21 MAY '21 WTI Crude Oil 63.50 66.13 Baker Hughes Rig Count 13 14 IHS OSV Utilization 19.2% 19.6% WTI Price U.S. Oil Production (millions bpd) U.S. 10.9Prod 1000s bopd 11.0* Sources: Baker-Hughes; IHS Markit; U.S. EIA
JUN. '21 JUN. '20 72.98 40.60 14 11 20.5% 22.6% GOM11.1* Rig Count Util. Rate11.0 %
*Weekly Estimated
Return to 2013 oil prices? GOM RIG COUNT
GOM Rig Count
By Jim Redden, Correspondent
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headline in the June 8 edition of The Wall Street Journal could have been pulled from mid-2013: “Traders Bet on Return of $100 Oil.” The article went on to say how traders have gobbled up call options tied to oil reaching $100/bbl by the end of next year, suggesting they are betting the current demand-supply imbalance is here to stay for a while. That narrative could easily be read as déjà vu all over again. For the first time since early 2008, oil prices hit triple digits in 2013, topping out at nearly $109/bbl. in September and hovered around $100/bbl. over much of the first half of 2014, until the flood of production overwhelmed the thirst for crude. Prices steadily eroded, eventually sinking to $29.13/bbl. in January 2016, a low that was eclipsed, of course, when Covid did its thing with demand. There are, however, some stark differences between the environments of then and now, which suggest an encore may not be in the cards. For one thing, eight years ago, investors were eagerly handing over cash, which operators were just as eager to spend to keep their pipelines and storage tanks full. Those same investors now demand
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fiscal discipline, insisting on increased returns over higher production. Even as the U.S. benchmark West Texas Intermediate (WTI) hovers around $70/bbl., producers, for now at least, are bowing to their shareholders. The Energy Information Administration (EIA) estimates that U.S. oil producJun-20 tion will increase only modestly from 20-Jul an average of 11.1 million bbl./day this Aug-20bbl./day in 2022. year to 11.8 million Sep-20 Then, there are today’s deep-pock20-Oct eted money people, who are kneeling Nov-20 to societal and government pressure to Dec-20 eliminate or at Jan-21 least slash carbon intensity and, therefore, want nothing to do Feb-21 with any investment 21-Marrelated to fossil fuels. Between21-Apr activist shareholders May-21 Jun-21
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and the courts, super-majors like Royal Dutch Shell and ExxonMobil have been forced to cut their carbon footprints, suggesting they are unlikely to contribute anywhere near their historical production levels. Even the International Energy Agency (IEA), traditionally an industry cheerleader, said that 11 of net-zero to meet the global target carbon emissions by12 2050, operators 13 any new oil and must immediately stop 14 gas exploration. 13 A likely unintended side effect of 13 this anti-oil sentiment is a premium on 17 the barrels that are produced, which, in 16 turn, raises inflation 17 concerns. This is just as the U.S. economy 12 is recovering from the ravages of the 13 pandemic. 14
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