My “$80 by November” prediction made in the last OPC newsletter missed out a key number; I meant by November 2017 not 2015! Obviously, I was far too bullish, and this current downturn is proving to be one of the worst ever, and possibly the longest ever; we shall soon find out. I remain optimistic, however, that the long term price will recover up to $80 and more – but it may take till November 2017 to hit the mark. Market conditions are such that there is an oversupply of oil with no appetite to mitigate this. It seems to be a waiting game to see how Saudi Arabia, and some other oil producing countries, ultimately react.
So, what does this mean to professionals within the upstream E&P sector?
Unfortunately, the reality is that the global industry has now idled over 1,000 rigs and slashed $100 billion in spending. A report last month from Bloomberg estimated that 250,000 jobs have been cut by the global oil and gas industry since the middle of 2014. The majority of job losses are in oilfield services but there are very few areas within the sector that are immune to cut backs.
My hopes that technical consultancies with resourcing expertise, such as OPC, could maintain staffing levels and generate enough work were over-optimistic as well. Like many of our competitors, we have reduced staffing levels, and it is with regret that several colleagues are no longer part of the OPC organisation. In addition, many long term consultants are now available for projects and contracts that arise. This is however the nature of the consulting business so that consultants take a “rest”, play some golf, go fishing or sailing, spend some time with their family they didn’t know they had, do those jobs they had always meant to do and come back to work when the business picks up, or decide now is the time to retire. OPC has had commercial relationships with such consultants for over 25 years in some cases. For those that have not retired, we look forward to working with them again in the not too distant future.
Growth in new business
Indeed, after a challenging year, we are now seeing growth in levels of new business, with several exciting new technical project contracts awarded over the last two months of the year. Our training services department is very busy organising bespoke in-company training courses throughout 2016 and we are also bidding for a number of technical resourcing contracts that will need sizeable consultant support should they be awarded in the first quarter of 2016. And with mergers and acquisitions being evaluated on a regular basis, OPC has been supporting these activities on behalf of clients.
In order to maximise our effectiveness, we have made a number of internal appointments including:
- Barry Shaw promoted to COO (Chief Operating Officer);
- Riley Smith is managing our Consultant Services Team and I am taking direct responsibility for our Technical Services Team, with project management support from Darrell Mandiwell. Matt Thompson has been promoted to Team Leader to assist with the administration of the Technical Team and I will continue to develop business for the company as a whole.
With these new appointments and a realignment of the business, OPC is well positioned to respond to developments in the market and I look forward to 2016 with optimism.