Economic Outlook from the Oilfield: What does the Rest of this Recovery Look Like? What is the New Normal? Planning for the Future?, Joseph Triepke, Founder & Principal Research Analyst, Infill Thinking, LLC

Leading Energy Analyst, Joseph Triepke, discusses the upcoming major trends for the oil markets- Upstream & Downstream and how they will soon impact energy markets, the workforce and you.
Get the real numbers, trends and forecasts from someone who is visiting the major oilfields, talking with the operators, service companies and drillers. Joseph is hitting the streets to get the deeply researched and original hard intel you need to be ready for 2017 and beyond.
Hear the latest intel on:
● How the OPEC cuts are holding up…or are they?
● New Trump administration and how it is really impacting the markets?
● Automation, Robotics and Technology trends creating efficiencies and demanding a new higher skilled workforce.
● How are the Supply and Demand forecasts holding up?
All of which will impact major energy and workforce decisions moving forward!

Transcript

1. Oilfield Economic Outlook WorkforceNEXT Energy Summit Joseph Triepke Founder & Principal Research Analyst www.InfillThinking.com March 29, 2017
2. 2 What Is Infill Thinking? Stories that really matter. No ads. No noise. No clutter. Unique angles on the most important oilfield stories Readable oilfield business updates No clickbait. No noise. No ads! Writing independently for energy HCM & HR executives. Read more.
3. 3 We’ve Picked Ourselves Up, Back On The High Wire Stories that really matter. No ads. No noise. No clutter. -Everything Bottomed In 2016 -Self-Made Recovery -In The Downturn, We Changed -In The Recovery, We Will Institutionalize These Changes -Shorter Cycles Ahead
4. 4 Oil Market Update Stories that really matter. No ads. No noise. No clutter. Are We Out Of The Woods? Unfortunately Not.
5. 5 Boring Is The New Exciting Stories that really matter. No ads. No noise. No clutter. Mar. US Stocks & CERAWeek Panic Over Self-Made Recovery $20 $30 $40 $50 $60 Jan-16 Mar-16 May-16 Jul-16 Aug-16 Oct-16 Dec-16 Feb-17 WTI Oil Spot Price Per Barrel WTI Spot Price Sources: EIA, Bloomberg, InfillThinking.com Feb. OPEC Freeze Proposed Apr. Doha Freeze Talks Fail Jan. Iran Sanctions Lifted Nov. OPEC & Non-OPEC Producers Set Cut Terms Feb. Oil Price Bottoms At $26 Aug. Price Fluctuates On OPEC Speculation May Outages From Canadian Wildfires & Nigerian Strife Lift Crude To $50 Jul. Rebalancing Doubts Return Sep. OPEC Prelim. Cut Accord Reached At Algiers Summit Dec. – Mar. Rangebound $51-$54 BORING!
6. 6 US Storage – The Industry’s Drunk Uncle Stories that really matter. No ads. No noise. No clutter. 250 350 450 550 Jan-88 Jan-92 Jan-96 Jan-00 Jan-04 Jan-08 Jan-12 Jan-16 Million Barrels of Oil US Crude Oil Stocks Prior 5-Year Range US Commercial Stocks Sources: EIA, InfillThinking.com
7. 7 OPEC Cut Focused On Cause (Glut), Not Symptom (Price) Stories that really matter. No ads. No noise. No clutter. 48 50 52 54 56 58 60 62 64 66 0 1 2 3 4 5 6 7 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Days Of Demand In Inventory Billions Of Barrels Record High Global Oil Inventories Total Forecast Refined Products Crude Days Demand Cover Sources: EIA, IEA, JODI, IHS, Financial Times
8. 8 Falling Volatility Is The Antidote For Strategic Paralysis Stories that really matter. No ads. No noise. No clutter. 0% 1% 2% 3% 4% 5% 4-Jan-16 4-Feb-16 4-Mar-16 4-Apr-16 4-May-16 4-Jun-16 4-Jul-16 4-Aug-16 4-Sep-16 4-Oct-16 4-Nov-16 4-Dec-16 4-Jan-17 4-Feb-17 4-Mar-17 Absolute Value Rolling 4-Week Daily % Change WTI Spot Oil Price Volatility Declined Sharply Over Past Year Volatility erased by OPEC in November
9. 9 Amid Lower Tolerance, Volatility Has Returned Stories that really matter. No ads. No noise. No clutter. 0% 2% 4% 6% 8% 10% 31-Oct-16 30-Nov-16 31-Dec-16 31-Jan-17 28-Feb-17 Absolute Value Of Daily % Change WTI Spot Oil Price Volatility Volatility’s biggest spike since November ▪ A 20% move at $75 oil is the difference between a good quarter and missing estimates. ▪ A 20% move at $45 oil is the difference between hiring and laying off people.
10. 10 Rebalancing Requires Patience Stories that really matter. No ads. No noise. No clutter. $0 $20 $40 $60 $80 $100 $120 -3 -2 -1 0 1 2 3 4 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 WTI Spot Price Global Oil Stock Change (mmbpd)* Global Monthly Surplus/Deficit Good Old Days Our Darkest Hour Rebalancing Glut Growing Glut Shrinking WTI Spot Price Sources: EIA, InfillThinking.com *Measured as daily production minus consumption
11. 11 Stories that really matter. No ads. No noise. No clutter. -20% -10% 0% 10% 20% 30% - 2 4 6 8 10 12 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Annual Rate Of Change US Oil Production (mmbpd) US Oil Production US Oil Production Y/Y Change US Shale Revolt Threatens Rebalancing Act Sources: EIA, Bloomberg, InfillThinking.com
12. 12 March Madness: Is $50 Oil Facing An Upset? Stories that really matter. No ads. No noise. No clutter. Pros Cons Arguments For Stable, $50+ Oil • Rebalancing Underway • OPEC Needs $50-$60 • OPEC Cut Extension • Demand Strength • Bottomed In 2016 • Declining Volatility • Oilfield Inflation • Cyclical Compression • Tight Oil Decline Rates • Project Declines Coming? Arguments For Lower Oil Prices • Storage Glut • OPEC Quotas Fail/Not Extended • US Shale Revolt • Volatility Returning? • Race To The Bottom? • Libyan Output • “Borrowing” Production • IMO Shipping Fuel Regs
13. 13 Making $50 Oil Great Again Stories that really matter. No ads. No noise. No clutter. ▪ Positive Vibes, But Does He Even Know What’s Next? ▪ Pro-Industry (Regs) ▪ Border Tax Uncertainty ▪ Corporate Tax Breaks – A $10bn O&G Boon?
14. 14 Oilfield Trends Update Stories that really matter. No ads. No noise. No clutter. This Ain’t Your Granddaddy's Recovery
15. 15 Here Shale Grows Again Stories that really matter. No ads. No noise. No clutter. 0 20 40 60 80 100 120 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Index Value Shale Executive Sentiment Index Surged To $100 Oil Levels* Shale Executive Sentiment Index Oil Price *Index based on growth-related mentions on earnings calls by five shale companies including E&P, drilling, completions, and general services. Indexed to 100 at peak Sources: Company Filings, Alpha Sense, InfillThinking.com
16. 16 The Sharpest Drilling Rebound In US History Stories that really matter. No ads. No noise. No clutter. 50 70 90 110 130 150 170 190 210 230 250 1 11 21 31 41 51 61 71 81 91 101 111 121 131 141 Rig Count Index (Trough At 100) Weeks Of Recovery (Trough At Zero) US Rig Count Recovery Phases 1999, V-Shape 2008, V-Shape 2001, U-Shape 1985, L-Shape 1982, n-Shape 2016/2017... Sources: Baker Hughes, InfillThinking.com
17. 17 So Far, US Shale Is Recovering In A Vacuum Stories that really matter. No ads. No noise. No clutter. $113 $133 $123 $158 $93 $42 $60 0 50 100 150 200 250 300 2011 2012 2013 2014 2015 2016E 2017E $ Billions Operator* Capex Spending Trends IOCs Independents *10 IOCs and 50 public Independents comprise our sample Source: Company filings, Alpha-Sense, InfillThinking.com
18. 18 The Unfair Recovery Stories that really matter. No ads. No noise. No clutter. 0 100 200 300 400 500 600 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 Rig Count Index Value Rig Counts Indexed To 100 At US Bottom Int'l Land (+2%) Offshore (-14%) US Land (+105%) Source: Baker Hughes, InfillThinking.com -67% -27% -23% -17% -10% -9% -7% -7% -6% -2% -2% 13% 21% 22% 37% 57% 105% 133% 250% 340% -100% 0% 100% 200% 300% 400% Angola Mexico Argentina Oman Venezuela Algeria Iraq Brazil Norway Saudi Arabia Abu Dhabi India Indonesia UK Kuwait Qatar USA Australia Ecuador Colombia Country Rig Count Change Since US Bottom In May 2016
19. 19 US & Saudi Rig Counts Move In Opposite Directions Stories that really matter. No ads. No noise. No clutter. Source: Baker Hughes, InfillThinking.com 0 500 1,000 1,500 2,000 2,500 80 90 100 110 120 130 140 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 Total US Rig Count Total Saudi Arabia Rig Count Saudi Arabia US Rig Count Saudi ramped rig count aggressively into the downturn and maintained elevated levels of drilling as US activity crashed. While the US rig count has doubled from bottom, the Saudi rig count is down 6% from peak.
20. 20 Does The Permian’s Future Look Like This? Stories that really matter. No ads. No noise. No clutter. Encana’s 64-Well Monster Permian Pad
21. 21 Insandity –Proppant Chokepoint, Theft, & Labor Shortage Stories that really matter. No ads. No noise. No clutter. 0 50 100 150 200 250 300 350 400 450 500 2013 2014 2015 2016 2017E 2018E Average Truckloads Of Sand Per Well Frac Sand Truckloads Per Well Up 3x To 7x Since 2014 Average US Well Leading Edge Completions Forecast Source: InfillThinking.com Estimates Big Picture Last Mile Issues ▪ Chokepoint ▪ Labor Shortage ▪ Black Market ▪ Local Mines
22. 22 Just When You Thought Deepwater Was Dead… A Twitch Stories that really matter. No ads. No noise. No clutter. Source: Statoil Statoil’s “New Gen” Portfolio Works At $27 Per Barrel HR Levers Being Pulled To Make Deepwater Great Again • Up Front Engineering • Changing The Culture • Centralizing Procurement • Simplification Of Workflow • Standardization
23. 23 Now I’ve Got A Question For You… Stories that really matter. No ads. No noise. No clutter. How Many Workers Will Never Return?
24. 24 Upstream Workforce Is Rightsized For $50 Oil Stories that really matter. No ads. No noise. No clutter. -57% -56% -56% -43% -22% -9% -60% -40% -20% 0% Mid-sized Oilfield Service US Land Drillers Offshore Drillers Large Oilfield Services US Independents IOCs Head Count Reduction Peak To Trough Oilfield Head Count Reductions By Sector Source: Company Filings, Alpha-Sense, InfillThinking.com
25. 25 Downsizing Is Done, But Consolidation Is Not Stories that really matter. No ads. No noise. No clutter. Reduced Reliance On Tribal Knowledge Technological Transformation Means Workforce Still Ripe For Consolidation Sources: Nabors Analyst Day 2016 Slide Deck
26. 26 Those Who Cut The Hardest To Hire The Fastest? Stories that really matter. No ads. No noise. No clutter. 0% 20% 40% 60% 80% Core Laboratories Oceaneering International US Silica FMC Tech National Oilwell Varco Dril-Quip Frank's Int'l Tenaris Schlumberger TETRA Technologies Halliburton Fairmount Santrol Parker Drilling Baker Hughes Forum Energy Technologies Weatherford RPC Inc. Basic Energy Services Trinidad Drilling Carbo Ceramics Helmerich & Payne CalFrac Superior Energy Services Precision Drilling Key Energy Services Nabors Industries Patterson-UTI Pioneer Energy Services Oil States International Seventy Seven Energy % Of Staff Laid Off During The Downturn Land Drilling Equip/Consumables Sand/Proppant SMID Cap Service Big Cap Service Source: Company Filings, Alpa-Sense, InfillThinking.com
27. 27 We’ve Barely Scratched The Surface… Stories that really matter. No ads. No noise. No clutter. Join with this promo code: WFNLIVE Get 25% off as long as you subscribe Monthly & annual options available: www.InfillThinking.com/Subscriber-Package/ Share the code with leaders in your organization Offer expires on April 15, 2017
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