Oil prices have been on the rebound lately. Earlier this month, prices for West Texas Intermediate (WTI) dipped just below $60, but as of today the price is hovering at a strong $63.50. Brent Crude is just above $67.00 which is just below our high for the past year! This is great news, but it doesn’t stop there. According to Tom Kool of OilPrice.com, “Bloomberg reports that some shale drillers in the Permian are supersizing their operations, with large wellpads drilling into multiple layers of the Permian all at once, rather than at a one-layer-at-a-time approach. They drill multiple wells that touch multiple layers in a single go, accessing the entire 3D “cube” of oil underneath the ground. One wellpad owned by Encana (NYSE: ECA), Bloomberg reports, was producing 20,000 bpd late last year.”
Earlier this month, Omar Garcia, President of STEER stated, “Our industry has always been innovative, but it takes a special kind of genius to meet the efficiency and quality standards that our members have been able to achieve as of late. I’m fully confident in our members’ abilities to push forward in pursuit of a stable oil price without sacrificing quality as they have done in the past.”
Another reason for the recent boost in oil & gas industry sentiment for the industry is Cheniere’s recent statement about their partnership with CNPC. Jack Fusco, Cheniere’s President and CEO stated, “We are pleased to announce these LNG contracts with China National Petroleum Corporation, an important global energy player in one of the largest and fastest growing LNG markets worldwide. These long-term SPAs build upon the Memorandum of Understanding we signed in November, and we look forward to a successful long-term partnership with CNPC. We expect these agreements to support the development of Corpus Christi Train 3, and we are now focused on completing the remaining necessary steps to reach a final investment decision later this year.”
2018 has a great start and we’re only in February. It’s important to be reasonable when predicting short term moves in any market, but if these first two months are indicators of anything, it seems to be a sign that the industry will have a good and sustainable year ahead.