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Wednesday, May 18, 2016

Drillers Pondering the Proper Timing and Pace for the Return of Rigs

From Powersource:
After several quarters of talking about budget cuts and laying down drilling rigs, antsy oil and gas analysts are looking forward to some excitement. How quickly can companies ramp up in response to better commodity prices, they wonder. 
The question, asked at numerous company earnings calls over the past several weeks, belies several assumptions: that prices are headed for a meaningful recovery and that the natural response to that recovery is to ramp up quickly. 
It’s one of the most popular questions thrown at David Khani, CFO at Consol Energy Inc., and one he approaches with caution. 
“That commodity curve could go crazy again if everybody starts drilling again,” Mr. Khani said. “You have to be careful about how fast you would ramp up.” 
Cecil-based Consol, which laid down all of its rigs last year, looks at commodity prices over a three-year horizon, he said. 
“You have to feel good about the sustainability of that curve,” Mr. Khani said, “or you have to be willing to hedge it.”
The whole article can be read by clicking right here.

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