Mayra Beltran / Houston Chronicle
The second quarter of 2015 was a tough one for the oil industry, as several big players posted steep earnings losses. Most CEOs gave stark offerings of what cheap crude would mean for their companies going forward.
Chris Ratcliffe / Bloomberg
Bernard Duroc-Danner, CEO of Weatherford, on continuing job cuts: “We tried to be as brutally realistic as what we need to do as we can...Land people took it on the chin first — people like us.”
Eddie Seal / Bloomberg
“This market is an opportunity as much as a punishment.”
Nick de la Torre / Houston Chronicle
Al Walker, CEO of Anadarko: “We as an industry are not anywhere close to the type of margin improvement that’s needed before we get back into a growth mode.”
Simon Dawson / Bloomberg
Bob Dudley, CEO of BP, on the company continuing to find way to cut costs, including axing jobs: “We will continue to identify more opportunities for simplification and efficiency.”
Alastair Grant / Associated Press
“There are further gains (to be made), we’re sort of well into restructuring costs in the upstream and plan to continue later this year...Certainly it’ll be in some of our big centers around the world — Houston, some more in Aberdeen.”
Melissa Phillip / Houston Chronicle
Clay Williams, CEO of NOV, on looking for acquisition targets: “Generally in a cyclical downturn, our view is that it becomes a buyer’s market."
Melissa Phillip / Houston Chronicle
“We’ve had three (deals) closed so far this year, and we’ve got another half-dozen letters of intent along with some larger transactions that we’ve reached out to some companies to explore.”
National Oilwell Varco / National Oilwell Varco
“It can be a challenging market to get deals done, because most companies don’t particularly want to sell at the bottom...The way we’ve adjusted our strategy is to increase the number of conversations we’re having.”
Gary Fountain / For the Chronicle
“Customers living hand to mouth aren’t sure if a particular unit will ever get another job and sure don’t want to put cash into equipment.”
Spencer Platt / Getty Images
Dan Dinges, CEO of Cabot Oil & Gas, on low prices of natural gas: “I understand the frustration in this type of market, but I can assure you, there are better days ahead."
John T. Rynd, CEO of Hercules Offshore, on the company filing for bankruptcy: “It’s been a difficult time for this company and a difficult decision to choose this path,” he said. “But it is the right one.”
Smiley N. Pool / Houston Chronicle
“We expect the Gulf of Mexico to be a tough market throughout 2015."
Eric Kayne / For the Chronicle
Philip Asherman, CEO of CB&I, on the company's falling revenue: “The business is still real solid, but we had the anticipation of some business that just didn’t drop this half (of the year).”
HOUSTON — Debt rating agency Moody’s Investor Service said Monday it had adjusted its oil price forecast to reflect a more pessimistic, slower recovery in 2016 and 2017.
The agency is the latest to join a growing consensus among analysts that oil prices will remain “lower for longer,” bringing more pain to an oil and gas industry that’s now struggling to keep production and revenues high while selling oil for about $45 per barrel.
Moody’s cut its price forecast for U.S. oil to $48 per barrel in 2016, $55 per barrel in 2017 and $63 per barrel in 2018.
The firm blamed resilient U.S. production that’s still sending large amounts of oil to market despite large cutbacks in investment and drilling. International producers have also contributed to the glut by increasing or holding production steady, and global demand isn’t growing enough to absorb the surplus in the coming years.
“Although capital spending has dropped substantially and the U.S. rig count has declined by more than half, U.S. production has only recently begun to decline,” Moody’s analysts wrote in their analysis. “Moreover, Saudi Arabia and Russia have both increased production to their highest levels since the early 1990s.”
The rating agency predicts that global oil production won’t fall until at least 2016.
Moody’s forecast a global increase in oil demand of 1 million barrels per day in 2015 and 2016 — not enough growth to immediately clear the surplus of oil.
In addition, Moody’s said that global crude oil inventories will continue to weigh on prices. In the U.S., inventories now stand at 468.6 million barrels, the highest level for this time of year in at least eight decades, according to the most recent Energy Information Administration data.
Iranian oil could also force oil prices lower, Moody’s said. Iran has estimated that lifted sanctions may allow it to boost production from the current level of 2.8 million barrels per day to 3.4 million barrels per day over about six to seven months.
“Although years of underinvestment have probably hampered the country’s production capacity significantly, the possibility or reality of higher Iranian exports will weigh on oil prices through at least early 2017,” the firm’s analysts wrote.