According to an article from the Houston Chronicle called Drillers spending increases indicate turning point for industry the Houston energy market is set to come back swinging. Several factors support this including increased 2017 monetary allocations for oil field operations and the possibility that oil will remain at $50 per barrel. For recruiters this change means one thing…it’s time to start your energy recruiting before your competitors do!
The Timeline
The Houston Chronicle article stated, “Historically, energy employment in Houston begins to rise about a year after crude prices hit bottom and six months after the nation's fleet of drilling rigs reaches its lowest point. U.S. crude snapped higher after plummeting to $26 a barrel in February, and the rig count has steadily climbed since May.” That means that by the beginning of next year there will be a revival and you do not want to be behind the curve.
What to Watch
The article we mentioned earlier stated that in the next few weeks the oil companies will be announcing their planned budgets for the upcoming year. “In coming weeks, oil companies will put out a flurry of announcements detailing how much money they plan to spend in oil patches in Texas, Oklahoma and North Dakota.” As a recruiter, make sure to look out for these announcements, as they are a direct indicator of how healthy the employment market will be in 2017.
Items to Consider
Per the Houston Chronicle article:
- “Assuming crude prices remain around $50 a barrel, the oil industry will likely spend at least 25 percent more in 2017 than it did this year across North America, bringing capital expenditures in the region to around $110 billion, according to investment bank Evercore ISI. That would be the largest increase Evercore has recorded since at least 2000.”
- “Midland-based Diamondback Energy, one of the largest producers in the Permian Basin in West Texas, plans to boost its budget 48 percent to as much as $650 million next year.”
Other Encouraging Factors
In addition to that article, several important news stories have come out within the past few days.
- The Houston-based energy cos. to swap Eagle Ford shale assets for $181M article from October 25th was an extremely helpful read. Essentially, the most important part of this article was this: “‘We are pleased to announce this bolt-on acquisition in the Eagle Ford Shale, as it increases our acreage position in the play by more than 15 percent and expands our core inventory in it by approximately 10 percent, with additional upside possible from a combination of infill drilling and multizone development,’ Chip Johnson IV, Carrizo’s president and CEO, said in a release. ‘A number of the acquired properties are also contiguous with our core acreage position, which should allow us to capitalize on efficiencies such as the ability to drill longer lateral wells from our existing leasehold.’" Clearly they are working toward increasing their position in the market and that is a very good sign!
- On October 31st, the Houston Buisiness Journal published an article called, Houston and Saudi Arabian energy cos. team up in joint venture In addition to direct growth in the Houston market, companies such as Nabors is expanding partnerships with other world locations such as Saudi Arabia. According to the article, “Nabors Industries Ltd. (NYSE: NBR) is forming a joint venture with Saudi Aramco to own, manage and operate onshore drilling rigs. The 50-50 joint venture is expected to start in the second quarter of 2017.” These sorts of deals will influence not only the U.S. economy, but the world’s.
- Megadeals are a huge deal when it comes to a market rebound. On October 27th an article called, High energy M&A activity shows market optimism reported, “There were 10 megadeals announced in the third quarter, up from just 5 across the first two quarters of this year, Meier said. In the second and third quarters, there were 98 deals done at more than $50 million each, a higher volume than in any other two-quarter period since before 2015, according to a third-quarter PwC report released by Meier and his team Oct 27. “
Overall it looks like Houston is poised to come out of their slump and it’s important that recruiters step up their game prior to the talent “gold rush” that may occur soon! One of the best ways to prepare for a busy recruiting season is to brush up on your terms. Consider using our easy, online Oil and Gas Quick Reference Guide.
