At the monthly San Angelo Chamber of Commerce luncheon Tuesday, Edward Mota reported a steady three-day updraft in the price of crude oil, to near $53 per barrel.
By day’s end, the slippery substance had again changed directions but still closed above $50 per barrel.
“The consensus is we are trying to find a price floor here, and we’re not far from it,” said Mota, local energy expert and guest speaker at the chamber’s Bentwood Country Club event. “In this industry nothing is predictable.”
The Chamber’s chairman of the board Jeff DeLoach introduced Mota, who in 2010 started clineshalecentral.com amid “the early whisperings of the oil boom.”
“We’ve experienced a huge surge of activity in the last four years,” Mota said.
After plunging about $100 per barrel in 2008, oil prices again rose above $110 in 2011 and precipitated a new oil boom in West Texas. But prices have seen a jagged decline since last summer, reaching below $45 in January and sending chills through the industry, which has decreased capital expenditure budgets by 30 percent to 40 percent across the board.
He cited a Bloomberg survey of nearly 100 energy analysts’ opinions about oil prices, forecast to range in the mid-$50s through the rest of 2015, and into the $60s or $70s in 2016.
“I don’t think we’ll see the 100s anytime soon,” Mota said. “But companies can be profitable below that.”
While layoffs in the thousands are being announced in some large corporations, Mota said sometimes people overestimate the local impact.
“Only a small percent are specific to our region,” he said. “We still have plenty going on here and have heavy activity.”
At its peak, the Permian Basin was seeing 175 drilling permits per week. It is down to about 150.
Mota also discussed the benefits of Texas’ diverse economy.
“As much as we in Texas think we depend on oil and gas, it’s not all there is.”
He said people who lose oil field jobs continue to have opportunities in other industries such as construction and trucking. The Permian Basin itself is diversified in its stratification, which offers a “four-layer cake” of oil beds, while the Eagle Ford has just one.
“At the end of the second quarter we will see where we are with job losses and rig counts,” Mota said. “In the third quarter we should reach a holding pattern.”
This article was written by Denise Morris from San Angelo Standard-Times, Texas and was legally licensed through the NewsCred publisher network.