May 1, 2016 – Financial Post
Survival, not growth, is the new mantra in the oilpatch’s great war on costs
By: Yadullah Hussain
As oil prices started biting last summer, a major Canadian energy company in Calgary began changing towels at its SAGD camp facility twice a week rather than daily. It may not have been a major decision, but it neatly illustrates the pressure that the entire industry is under.
“It’s small, tiny thing, but industry has done a million things like that,” said Rusty Braziel, chief executive of Houston-based RBN Energy consultancy and author of The Domino Effect, who heard the story from the SAGD client this week. “If they had made that change two years ago, people would have complained, quit. Guess what happened when they implemented it? Nobody complained.”
Oil prices may have jumped US$20 per barrel to US$46 during the past two months, but it’s cold comfort for the Canadian oilpatch, which has been decimated by an 18-month siege led by Saudi Arabia and its cohorts.
Helpless against the low prices championed by the Organization of the Petroleum Exporting Countries, the rest of the industry has, in turn, waged a war on costs. Deep in the paper trenches, executives are hacking away at years of profligate spending. Survival, not growth, is the new mantra.
But it’s unclear whether they have done enough.
Read the full story here: http://business.financialpost.com/news/energy/survival-not-growth-is-the-new-mantra-in-the-oilpatchs-great-war-on-costs?__lsa=b7a9-cce2
