From the Editor

I had a good conversation with my old friend John Westwood (Douglas-Westwood) about the reaction of the industry to the financial crisis and falling oil and gas prices.  John had just sent a note that he was opening an office on Wall Street in New York, a rather gutsy move if the doom and gloom sector is to be believed. The day before, I had received Douglas-Westwood’s thoughts on the current situation in a document entitled “Turmoil in the Credit Markets: The Impact on the Oil & Gas Sector.” You can find it at www.dw-1.com.  John and his company are long-term thinkers - hence the new office in New York. Their conclusions in the recent white paper are:

a short-term outlook that includes demand destruction, high levels of uncertainty and budgets hit by a lack of confidence, but large order backlogs that should carry a number of service/equipment companies through;

a mid-term outlook that includes oil prices still above most hurdles (around $80/bbl), slow downs in exploration rather than ongoing field developments, and reduced costs of inputs such as steel;

and a long-term outlook that includes a supply situation that is unchanged coupled with another sharp “supply crunch” when the global economy recovers.

To quote the final conclusion of the report, “In the longer-term, our views are  unchanged and global oil supply limits are likely to be tested again during the next decade.” So, if you are in this for the long-haul - and I can’t imagine that many of you are not - now might be the time to make a strategic investment or two, like John.

You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.