More than 75 Member Company employees and participants met on February 16 for a Permian Basin Chapter luncheon with Shad Frazier, Vice President of Operations, Endeavor Energy Resources. Austin Harbour, Managing Director, Piper Sandler, offered a market outlook.
Frazier discussed managing market conditions through collaboration with the services and equipment sector. With oil prices at a high not seen since 2014, the market is observing unequal pricing between commodities and services. Global factors such as the current situation between Russia and Ukraine, China’s requirements for power generation and the increasing world needs for energy, make forecasting oil and gas demand challenging.
“Service costs are recovering,” Frazier said, “but they are lagging by six months to a year from what they could become.”
Where does this leave the Permian Basin?
“Oil companies must show that they are keeping costs under control,” Frazier said. “They will pressure the market to restrict rapid price inflation to maximize profits and shareholder return. Companies are more willing to lock in pricing now to keep their costs from inflating.”
With the current unemployment rate in Midland County at 4.1%, performance from service companies is key. Service companies want to raise prices to try and regain lost revenue from the pandemic.
“Vendors are going to have to show value for their product. Pricing won’t matter as much as performance because performance will have a great impact on value,” he said.
The Chapter will hold its annual scholarship golf tournament on April 28, with all proceeds funding local scholarships for those entering or continuing an undergraduate degree, graduate degree or vocational program. Registration will open soon.
The Council thanks sponsors Estis Compression, Flex Flow, A DistributionNOW Company, GR Energy Services and Silvertip Completions Services for their support.
Roni Ashley, Director Operations, writes about the Council’s membership and regional chapters. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.