Energy Prospectus

Halliburton expects active rig count to continue falling through Q2. So do I. The damage to the oilfield services companies is terrible and will take a long time to fix even when oil & gas prices rebound. Read article below.

http://www.zerohedge.com/news/2016-04-2 ... r-beyond-h

This is why I believe U.S. oil production will continue falling for over a year, even after oil prices rebound (no matter how high they go).

I have been holding off even looking at oil services, but their stocks seem to have gone up with the price of oil even though drilling won't pick up for awhile. Go figure.

The big oilfield services companies like HAL, BHI and SLB will definitely survive the downturn AND they pick up market share. However, they have fired so many people that it will take a long time to ramp up. The earliest that I see drilling picking up is Q1 2017. When oil moves back over $60, there will be a few more well completions but not enough to reverse a steep decline in production.

Wall Street is definitely looking forward as Q1 and Q2 results are going to be bad across the industry.

The people that I feel sorry for are the geologists, petroleum engineers and other highly specialized workers. They lost high paying jobs that will be impossible to replace. When I was still at Hess we had several major layoffs. Once I was Home Depot and ran into one of our former engineers that was working in the hardware section and it was weird. Real people do suffer in these downturns.

The good news is that "$70 is the new $100" for oil. Drilling & completions costs were already coming down before all of this started. Much of the costs savings will stick. $70 oil will generate about the same level of profit that $100 did three years ago.