OCTG Caught In The ‘Muddle’

Photo Courtesy Devon Energy Corp.

Photo Courtesy Devon Energy Corp.

Susan Murphy | Publisher

Susan Murphy | Publisher

Historically, the month of May has always been a “lite” news month no matter what’s taking place in the oil & gas markets. We refer to it as the ‘muddle’ of the year and this May is no exception. Try as we may to keep our ears to the ground in search of promising signals of an imminent recovery, the fifth month of this year isn’t offering much consolation. And just when you thought you’d heard it all along comes ABC with their announcement of a primetime epic coming this fall called “Oil.” Leave it to ABC to give viewers their crude, formulaic version of the oil patch gone wild: the “Breaking Bad” of the Bakken. Sadly, our assumption is that this skewed soap opera won’t tip the ‘shales’ in favor of the oil industry.

Be that as it may, there are a few glimmers of hope on the horizon. Here in Houston, ground zero for the oil patch, attendance at the industry’s preeminent trade show, the annual Offshore Technology Conference (OTC), was best described as down but not out (-13% Y/Y) despite one of the biggest oil market upsets on record. That the sentiment wasn’t all doom and gloom suggests participants are prepared to grind it out with cautious optimism. While all appearances hint that we’re on the cusp of rig count trough, there’s also talk that a few E&P’s might be dipping a toe back in the water – deploying a rig or two in the proven sweet spots by the third quarter – provided crude prices continue to stabilize. And then there are the many operators who have their ‘DUCs’ (drilled but uncompleted wells) in a row just waiting for the opportune moment to put the pedal to the metal.

Looking across the current OCTG landscape, onshore permitting remains rather stagnant but that too is adopting a pattern of greater stability than we’ve witnessed in recent months. Domestic mill shipments have all but stalled while OCTG producers grapple with market uncertainty and the bearish argument that an average of 750 rigs is all that’s needed to keep U.S. oil production flat. This, coupled with the ambivalent response from OCTG importers gives no quarter to pricing. Simply put, OCTG pricing remains anemic and there doesn’t appear to be any silver bullets to reverse the current downward trajectory for the medium term. With nine months of supply on hand in March and the OPEC cartel expected to hold production steady when they meet again June 5, the best anyone can do is hold on and hope there’s no “Mayday” signal around the next bend.

About The OCTG Situation Report

Susan Murphy is the Publisher + Editor in Chief of The OCTG Situation Report, a leading authority focused on the North American Oil Country Tubular Goods market. Susan has worked alongside the founder of The OCTG Situation Report, Duane Murphy (and yes, there is a family connection!) for the past decade assisting in various aspects of producing the monthly publication and special projects including market research and development. It had long been suspected that Susan carried the 'OCTGene,' a fact that was confirmed when she took the reins in 2012. A native of Michigan and now practicing cowgirl, Susan employs her education from both the University of Michigan and Michigan State University bringing her expertise in the areas of research, marketing, branding and creative and technical writing to The Report. She has also enjoyed a successful business career as a lauded entrepreneur, running her own brand/marketing and advertising/design firms.
This entry was posted in DUCs, OCTG, Offshore Technology Conference, Oil & Gas Industry, Oil & Gas Pricing, Oil Country Tublular Goods, Oil Prices, OTC, Shale and tagged , , , , , , , , , . Bookmark the permalink.

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