We are approaching the one-year anniversary of the most recent market correction in our industry, slashing the active rig count by approximately 1,000 rigs over the same time last year. During the past year, I have witnessed numerous daily discussions regarding the price of oil and the price of natural gas, etc. There is no doubt that the commodity price is a key factor in our customers’ choices to invest through the drill bit, and the drilling activity that follows.
Until the calendar rolled over to July, signs hinted of a potential increase in activity during the second half of 2015 and continuing into 2016. Unfortunately, the recent additional decline in the price of oil over the past two months has taken the wind out of our sails and with it our hopes for an increase in activity this year and perhaps into next.
The reasons for the recent collapse are many: Greece’s default, China’s currency devaluation, the Iran deal, the increase in strength of the dollar, the decline in China’s GDP, etc. There is plenty of blame to go around. The causes have been widely discussed by analysts, business leaders, economists and others. While their conclusions might be varied, they are all likely correct in their analyses.
One thing is for certain, however. We, as individuals, cannot control the price of oil or natural gas. We never have, and I’m confident we never will. Therefore, I believe we should focus our energy on what we can control – not what we can’t control. Today’s business environment demands maximum efficiency, productivity and commitment, plus the drive and energy to keep moving in the face of daunting obstacles. I have made this point often this year – and it bears repeating – that this is a time for us to commit to finding ways to operate as efficiently as possible, while staying the course on training and educating our personnel. Competent crews are critical in any market situation. A single incident by a single company becomes a black eye for the entire industry.
Add this to the work that IADC’s Policy, Government and Regulatory Affairs staff is doing during the current market correction, which is serving as a vital lifeline to hard-pressed member companies who are struggling to find resources to respond to external issues. In this area, IADC is giving practical support to members who otherwise would be vulnerable to the threat of major changes to their rigs and equipment from regulators.
This is our industry. We chose this industry on which to build our careers, and it enables us to provide for our families. It is and will probably always be a cyclical industry. This current environment is not fun. And while it is painful now, I know that better days are coming.
A good friend and colleague of mine recently said to me, “We will all come out of this current market environment a smaller but stronger industry.” I completely agree with his comment and hope, as all of you do, that we come out of this sooner rather than later. Until then, we should continue to focus on factors that are within our control to ensure our industry’s future success. DC