By Rachel Adams-Heard
Given eight options for what their primary goal is over the next six months, the biggest share of respondents, 19%, said it’s keeping production flat, while 16% said growing output and another 16% prioritized reducing debt. Still, as the Dallas Fed pointed out, it’s a marked shift from a survey in 2018 that showed growing production to be the runaway favorite.
In addition, about 43% of respondents expect the U.S. oil rig count to rise “substantially” if the U.S. crude benchmark rises to between $51 and $55 a barrel. “Sustained oil prices of $50 per barrel would kick things off again,” one unidentified respondent said in the report.
The oil and gas industry has seen a wave of bankruptcies in recent months after crude prices crashed. More are coming, according to other unattributed comments:
Lots of undeclared bankruptcies are still in the pipeline in the shale plays. As production drops due to the decline rates for shale, cash flows will demand bankruptcy. Private equity is not going to save the day for them. Merger and acquisition will happen as a Band-Aid.
Some executives warned the industry must now brace for the November presidential election:
We are in terribly uncertain times. The current drop in oil prices is very unsettling as far as what to expect going forward. The November election could severely impair the long-term success of my business if Biden is elected.
One respondent highlighted Joe Biden’s energy policies, which include a pledge to end new fracking on federal land:
A Biden administration would wreak havoc on our industry—way worse than OPEC. It would put us out of business. We could not survive a Green New Deal.
Another expressed concern about how the industry will be reshaped by the recent turmoil:
I have lived through several industry booms and busts, but this one is different. I am afraid that only large oil companies with diverse sources of capital will survive. Dividends from one of the major international oil companies are one source of family income, and I am very concerned about the company making a substantial dividend reduction.