The recent dramatic drop in the cost of crude has dashed the hopes of many small producers, and cast a shadow over the half-decade of explosive economic growth in Texas. With prices slashed by more than 50 percent, most producers are drastically reducing spending and pulling back production.
For example, the Midland Reporter-Telegram reported Concho Resources trimmed its $3 billion capital program by a third and reduced its number of active rigs from 35 to 25. Many smaller producers have fallen behind on their equipment leases, impacting a number of ancillary businesses.
However, residents have expressed confidence that the down times will not last forever. Although the last time the rig count declined as rapidly was in late 2008 and early 2009, when oil fell from $140 to under $40 a barrel, many still staunchly believe that boom times will come again.
"This is Midland and it's just a way of life," long-time resident David Cristiani told the source. "We are always prepared for slowdowns. We just hunker down. They wrote off the Permian Basin in 1984, but the oil will always be here."
Unlike traditional wells, shale plays can be shut off quickly, helping to mitigate potential losses. However, this also means that oil drilling companies need to pay careful attention to the efficiency of their operations as well as current market conditions. Oil and gas strategy consulting can help ensure that producers are making the right moves to successfully weather the current downturn, and are in the ideal position to exploit new growth opportunities when they become available.