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“I
wouldn’t be surprised to see firming prices in the period
ahead,” Kaplan told reporters after an open forum with bankers
and oil men in the heart of the oil-producing Permian Basin in
West Texas.
“That doesn’t mean that 2016 is going to be an easy year ...
there are still going to be companies that are going to have to
be restructured.”
The biggest U.S. energy price crash in decades has forced more
than 60 North American oil and gas producers to seek protection
from creditors since early 2015, including two this week.
Hundreds of drilling rigs have been idled in the Permian Basin
since the price of crude dropped from its peak in mid-2014,
pushing the basin's rig count down to just 130 in April. But
data from Baker Hughes and Drilling Info show several rigs have
been added in the last two weeks alone.
And though debt-laden companies will still need to fold or find
buyers, demand and supply in the global oil market will have
about evened out by next year, Kaplan said.
“I think you’ll see a slow but gradual recovery,” Kaplan said.
At least some West Texas oil men agree with that view.
Steve Pruett, chief executive of Elevation Resources, has kept
his one oil rig operating throughout the crash.
Stopping it would have meant losing money already spent on the
rig itself, and even could have cost him his land lease.
Besides, he said, each time he drills a well, he does it in less
time and at lower cost, helping him create a blueprint that will
speed development once the oil price returns.
“I think by this time next year, we will see sustained $60(per
barrel) oil prices,” he said, at which point he said would
likely add a second rig. Current prices are just below $50 a
barrel, a long way from the $100 per barrel they were at in
mid-2014 before tumbling.
Lenders, too, are starting to warm up. “My gut says, the worst
is over,” says Keith Moore, president and CEO of West Texas
National Bank, who was on hand for Kaplan's speech.
Oil and gas companies are not exactly knocking down his doors
for loans to expand, but he expects to see an uptick in demand
if oil prices keep their current level or creep higher, Moore
said.
(Reporting by Ann Saphir, additional reporting by Terry Wade in
Houston; Editing by Tom Brown)
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