Nearly a third of U.S. oil executives believe they’ll be able to hire new workers next year if the oil downturn eases further, a new survey shows.
Executives acknowledged the expansion may prove difficult to draw skilled employees back to the oil patch after a two-year malaise that led to thousands of job cuts across the industry.
While 45 percent said they planned to increase spending next year, just 17 percent said they’re ready to quickly ramp up activity when oil prices recover, according to a recent survey of nearly 600 executives by professional services firm Grant Thornton and consultancy Hart Energy.
The plans to hike oil field spending mark a stark change for an industry that has cut back on drilling and payrolls for more than two years after crude prices collapsed in 2014. But the industry’s prospects in 2017 still hinge on whether the Organization of Petroleum Exporting Countries solidify plans to curb oil production at the end of the month. If the cartel’s negotiations fail, analysts expect crude prices to fall.
“A price back to $40 or below could certainly change this outlook,” said Kevin Schroeder, head of Grant Thornton’s energy practice. Still, if oil prices hold near $45 a barrel, $5 lower than when the October survey was taken, the industry may still begin restarting activity, given that the worst of the bust appears to be over and capital markets have opened to supply cash needed for acquisitions, he added.
In the survey, only 10 percent of executives said they plan to reduce spending levels next year, while 45 percent said they’ll maintain current budgets. Fourteen percent said they’ll shrink payrolls next year, while 45 percent wouldn’t cut or hire new workers. Still, more than half said they only have enough cash to keep drilling activity flat, and just 15 percent said they’ll dispatch more rigs to the oil patch.