Here We Are: Recession Case
- Historical 2% demand growth stunted by economic stagnation
- Industrial woes continue
- Oil & gas compete for switchable customers as oil prices slump
- Individuals conserve with memory of high price sting
- Gas demand for power stagnant, but capacity growing
- High activity can’t overcome geological realities - reduced supply from old basins
- Migration to unconventional & deeper prospects requires:
- Technology improvements
- New public incentives
- Higher mean prices
- Reluctance to believe higher prices sets up next cycle
- Price worked effectively to reduce winter demand
- Old views must change - price will rebound above historical mean
- Higher prices will be critical to long term supply growth
- Marginal plays must become economic
- Exploration desperately needed but risk must be compensated
- Political incentives spurred by tight markets can unlock significant new resource
- Next cycle likely stronger and longer
Recession has softened 2001 market, but basic problem unsolved.
Winners will be companies that can continue activity in preparation for upturn & grow production profitably.