Saudi inaction fails to stem domestic production boom

The most recent report released by the Texas Railroad Commission shows that Saudi Arabia efforts to hamstring American oil producers by cutting crude prices have had little effect on productivity in the state. Oil producers in Texas continue their strong growth from recent months, but some signs point to a slowdown in the future. 

According to data from the Texas Railroad Commission, crude oil production amounted to 2.21 million barrels a day for October, a 26 percent increase over the 1.75 million produced in October 2013. This continues the trend of year-over-year growth rates that has been taking place for all of 2014. 

West Texas Intermediate, the U.S. benchmark, closed at $57 on Tuesday. If that price holds, analysts from the Dallas Morning News are estimating that domestic production will continue to grow into mid-2015, at which point it could plateau if prices do not increase. 

These challenges have caused some drilling organizations to scale back their efforts in the coming year. Conoco Phillips and Marathon have both announced their drilling budgets for next year will be reduced by 20 percent.

"There's more to come in the months ahead," Pavel Molchanov, an energy analyst with Raymond James, warned the Dallas Morning News. "This isn't pleasant, but this is how the market rebalances itself."

The Texas Railroad Commission report also noted that permits for oil drilling fell 50 percent from the previous month, although current drill counts remain relatively steady. The number of active drills in Texas has fluctuated by only 5 percent since October, the report notes. 

With these challenging market forces, many organizations may be considering transitioning to new and more efficient models. Change management consulting can ensure that these efforts help companies emerge stronger and more competitive.