Daniel Moynihan, a US Senator, coined the phrase “You are entitled to your own opinion but not your own facts”. Information influences perspective.
Energy Voice has just announced the first findings from its energy2050 study, an important work in establishing the facts we currently face. I was fortunate enough to be at OTC for their first public debate.
Stimulating dialogue and gathering and analysing data on market experiences and sentiment is crucial at times like these. You can find the study’s detailed statistics elsewhere, but it doesn’t take a company doctor to tell you that regularly taking the pulse of the industry is the right thing to be doing. When the industry is under stress, it becomes crucial.
Throughout OTC I have been impressed by the openness in which information has been shared and debate has taken place.
Amongst other things, I have witnessed the CEOs of some of the industry’s biggest oilfield service companies champion standardisation.
BMW offers a 5 series and a 7 series.
You just don’t ask for a 5.3 series to be made for you. However I do wonder if these CEO’s people, and more importantly their customers, will take them at their word. If they do, they may need to revisit their business models. But reinvention is always preferable to extinction. Notwithstanding it is a cyclical industry, individual players are surely playing with high stakes.
Nobody can resist looking for an oil price prediction, and to the extent you are looking for that encouragement I can report the sentiment here is positive, but with the message that you need to be prepared to be in business at $65 oil in the medium term. For much of the world, and for much of production, that’s tolerable. For the UKCS, and importantly new E&P in the UKCS, it’s looking really challenging. But as a European once said, if the facts don’t fit the theory, change the facts (Albert Einstein).
One good thing is for sure. Folk are not just waiting for global population increases and political unrest to push the oil price back up.
I have to share one last Houston lesson with you before I pack my bags and head for home. From the CEOs to the taxi drivers everyone here knows the oil price prediction of the man they call “Mattress Mack”. His upmarket Houston furniture store is offering its bigger customers their money back if the price of West Texas Intermediate Crude tops $85 per barrel at the end of 2015 (rules apply). Even more staggering is that Mack has made such bets before, lost, paid out and lived to do it again. Has his bank sold him a hedging product? Wouldn’t you? Mack is no oil industry expert. Sometimes it pays to think differently.
OTC 2015 has been a great time for acknowledging the challenges, establishing the facts, moving the debates on, and sowing the seeds of collaboration. Are the current unattractive facts set in stone? No. Time and effort changes everything.
That’s why the energy2050 study is ongoing. The next phase kicks off shortly. Be part of it and fuel the conversation.
Peter Murray is a partner at Scottish law firm Ledingham Chalmers where he specialises in UK corporate law and international projects.
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