OPEC Cuts, Permian Investments Create Optimism for Oil, Gas Industry

OPEC Cuts, Permian Investments Create Optimism for Oil, Gas Industry
A recent survey by the Dallas Fed reveals a positive shift in the oil and gas industry's sentiment in 4Q 2016 and a brighter outlook for 2017.

The tone of cautious optimism for the oil and gas industry will likely continue as we enter into 2017. After oil prices bottomed out in 1Q 2016 and OPEC finally agreed to cut production, sentiments among the industry seem to be on the rise.

Oil and gas labor market conditions were positive in 4Q 2016, the first time this year, according to a quarterly energy survey released Dec. 29 by the Federal Reserve Bank of Dallas.

The survey of 147 E&P (exploration and production) firms and oilfield services firms in the Eleventh District (Texas, northern Louisiana and southern New Mexico) revealed:

  • Although the majority of respondents reported no change in headcounts, 18 percent of firms reported net hiring, while 15 percent reported net layoffs
  • Oil and gas production stopped declining this quarter, according to E&P firms
  • 58 percent of respondents revised up their 2017 oil price forecasts and company outlooks in response to announced production cuts
  • 71 percent of respondents expect higher oil prices a year from now, while 50 percent expect higher gas prices

OPEC and Production Cuts

The energy survey also included questions about OPEC and some non-OPEC countries agreeing to curb production in 2017.

Responses were split, with most expressing doubt that OPEC and other non-OPEC countries would be able to enforce agreements to limit crude oil production. Forty-two percent of respondents expect production agreements to be enforced, while 58 percent believe they will not be enforced.

Based upon recent meetings regarding cuts to crude production, 44 percent of respondents believe it’s most likely the oil market will come into balance in 3Q 2017. Skepticism surrounding OPEC’s agreement affected these responses. Almost all respondents who believe markets will balance in 2018 or later also doubt producer agreements will be enforced.

Positivity in the Permian

A bright spot for the upstream industry in the second half of 2016 was the increased interest in the Permian. Operators began to jump at the chance to acquire acreage – referred to as “Permian Panic.” Diamondback Energy Inc. said Dec. 14 it would pay $2.43 billion for acreage in the Permian, making it one of the latest companies to show interest.     

While some survey respondents said they believe Permian acreage was overvalued, the increased Permian activity does stand to create employment opportunities – something oil and gas professionals have been waiting on for years.

Oilfield services company Halliburton is looking to hire 200 workers in the Permian, spokesperson Emily Mir said in an email to Rigzone. The company is hiring in all of its product service lines and support functions in the Permian.

“The Permian Basin is an important area for Halliburton and we’ll continue to make adjustments to our workforce based on business demand as needed,” Mir said.

Valerie is an experienced writer and editor dedicated to providing useful and relevant career news about the oil and gas industry. Email Valerie at valerie.jones@rigzone.com

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Hilton Hannibal | Jan. 3, 2017
As I have lamented before cc Opec a feel its method of reasoning has lost most logic. The price of Brent has gone up and we can expect an increase concerning other commodities. At sight if this agreement sticks and shale oil in the US is not increased we can really see smiles on oil producing countries including Russia. OPEC has shown in the past that it can unravel markets, bickering amongst the OPEC community was and is the norm,ect. So how do we hope that this deal does not undo on the gold carpets of Vienne due to political infighting,overriding ambition, geo-hegemony and painfull tears. Well to believe in this deal ,markets and oil producers must have the stamina to endure and digest what the global political/economic agenda in the next six months see fit to consume .The US Trump administration together with Iran and Saudi Arabia must act logic in the middle east.Any diverse rhetoric behavior will have a negative effect on this agreement showing severe ramifications worldwide. OPEC have a steep uphill journey with a bumpy ride back ,if these members cannot deliver now, gold will become a stable commodity.


Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE

More from this Author
Valerie Jones
Editor, Careers | Rigzone
 -  Ideal Employer Survey Reveals Midstrea... (Jan 13)
 -  BLOG: Houston Profitable Area for STEM... (Jan 11)
 -  Jobs Report: US Mining Employment Rema... (Jan 6)
 -  BLOG: Study Shows US Residents Leaving... (Jan 6)
 -  Three Things to Consider Before Retiri... (Jan 4)


Most Popular Articles

From the Career Center
Jobs that may interest you
Business Development Director - Midstream Services
Expertise: Business Development|Operations Management
Location: Houston, TX
 
Vice President, Midstream Operations
Expertise: Operations Management
Location: Houston, TX
 
Director Health, Safety & Environmental
Expertise: Operations Management
Location: Houston, TX
 
search for more jobs

Brent Crude Oil : $55.45/BBL 0.99%
Light Crude Oil : $52.37/BBL 1.20%
Natural Gas : $3.42/MMBtu 0.88%
Updated in last 24 hours