fit for thirty perhaps?3 Nov 2015 10:33
There is clearly ongoing uncertainty in relation to the oil price although most analysts are suggesting a 'lower for longer' scenario with a key theme being that companies need to be 'fit for $50'. The industry has already responded by reducing the cost profile. For example, seismic and rig rates are substantially lower than one year ago which should encourage companies to continue exploration. In the medium term, as has happened in previous cycles, the oil price will presumably increase due to supply constraints caused by the reduced investment we have witnessed in the last year. However, there remains considerable uncertainty about the timescale for the recovery of the oil price.
At the same time, the deep cuts to staffing in many companies, including the international oil companies (IOCs) and large US independents, mean that their capability to undertake exploration is severely curtailed. This provides a real opportunity for Getech to provide focused, high quality advice to these companies and the last year has demonstrated that, even in challenging times for the sector, we can continue to develop a robust business. Nevertheless, in the short-term there remains considerable uncertainty about the state of the market and its impact on our trading and accordingly we believe the year ahead will be trading substantially below current market expectations. In this context we will seek to mitigate the immediate effects of the lower oil price while at the same time pursuing attractive opportunities as and when they are available to grow our business in the medium to long term.
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