“God, give me another oil boom, and I promise not to blow it this time!”
Over the years I have seen a number of versions of this pithy bumper sticker maxim – most of which were less civil – but the sentiment remains the same; give me enough trade today with the requisite time to plan for the years of want.
I attended a closed meeting in Houston in 2014 with a major Oil & Gas player that left few other impressions for where the industry saw things going. In fact, I was surprised how quickly they had begun ratcheting down their Telecoms infrastructure investment in anticipation of the coming year or more. And since that time I have watched the price of oil drop from what was ~$65 per barrel to a recent close of under $45, or a further reduction of some 45%.
Since last year, speculation on the direction and impact of the price of a barrel on the Oil & Gas industry has been rife. Concurrently, Telecoms infrastructure spending has reduced considerably by traditional offshore companies, while the newer onshore fracking players are investing little in order to service their outstanding debt. Investors.com recently concluded:
“The Energy Information Administration said Friday that 83% of the operating cash at U.S. companies with onshore activity was devoted to debt repayments from July 1, 2014 to June 30, 2015, marking the highest rate since at least 2012.”
So, does this mean only doom and gloom for this industry’s future? Maybe yes; maybe no.
Analysts much smarter than me are calling for considerable industry consolidation. I would guess that a lot of onshore fracking operations will be available on the cheap in the near term. In hand, new offshore exploration and production areas will be opening up in the future (Arctic, US East Coast, etc.), which will eventually require advanced Telecoms. The question is not whether these offshore facilities will require submarine fiber, but when?
Lastly, and not coincidentally, that ‘epic’ Bruce Willis motion picture, Armageddon opines:
President: Dan, we didn’t see this thing coming?
Dan: Well, our object collision budget’s a million dollars that allows us to track about 3% of the sky, and beg’n your pardon sir, but it’s a big-ass sky!