Gloomy Days in the Oil Patch, but Some See a Glimmer of Light

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New York Times | July 29, 2016 | Clifford Krauss & Stanley Reed

HOUSTON — As recently as two summers ago, Latshaw Drilling was so fully booked it sometimes had to turn away oil companies eager to rent one of its 39 rigs at $22,000 a day.

But that was before the collapse of oil prices, which despite a recent upturn from February lows, are still nowhere near their 2014 levels. Because of slumping world demand and a glut of global supply, oil players of all sorts — whether major producers like Royal Dutch Shell, smaller companies or service providers like Latshaw Drilling — are still struggling to cope with the industry’s doldrums.

In the case of Latshaw, based in Tulsa, Okla., only 16 of its rigs are now in use, although it has cut the daily rental price by a third and aggressively phoned, wined and dined prospective customers. Even when Latshaw does make a deal, not all the workers it laid off want to return to a business that is so cyclically volatile.

“It’s gone quiet,” said Steve McCoy, Latshaw’s vice president for contracts. “You have to pursue every lead, turn over every rock, to try to get ahead of the game.”

As the big oil companies reported their earnings this week, not even Exxon Mobil and Chevron, the two American industry leaders that posted results on Friday, could escape the fallout from a market of deteriorating oil prices and declining profit margins from refining.

Exxon’s second-quarter profit was down nearly 60 percent from a year earlier, to $1.7 billion. Chevron reported a loss of $1.47 billion, in contrast to a profit of $571 million in last year’s second quarter.

The price of a barrel of West Texas Intermediate crude oil, a benchmark, was $41.38 Friday — compared with just over $100 this time two years ago.

Oil companies have slashed their exploration and production budgets, many by as much as half. The cuts total more than $150 billion through next year. An estimated 150,000 energy workers have lost their jobs in the United States, while more than 150 oil and gas companies in North America have filed for bankruptcy since early 2015.

The latest quarter’s results have been even more dismal than industry analysts predicted. Chevron’s loss for the quarter was its largest since 2001.

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