Monday, October 6, 2008

Crisis casts shadow over oil patch

San Francisco wasn't so sunny today. While the weather outside was beautiful, the mood inside the IPAA OGIS conference was less than joyful. I've been wondering when the energy industry would, at the very least, reference the financial crisis. The energy industry has been incredibly strong in past years, but it doesn't operate in a vacuum.

While the financial markets have been gloomy for awhile, attitudes around the oil patch have remained optimistic despite the crumbling economy around them. That is, until now.

Nearly every presenter started off with a joke about the markets. "Sorry I'm late; I couldn't tear myself away from the Lehman Brothers interrogation," said Southwestern Energy's Harold Korell. Another joked that the water pitchers should be filled with vodka instead.

The focus of presentations became less about assets and properties and more about financials and balance sheets. As it will now be much harder to raise capital , companies talked about recent deals and financings signed "just in time." Words like "liquidity" and "unused" in reference to credit facilities became the buzzwords of the day.

While executives finally recognized the impact the financial markets have on energy, the overall sentiment remained positive. "While people are probably glued to the markets," said Swift's Bruce Vincent, "I want people to know that the fundamentals of energy are strong."

Does anyone else remember hearing that in reference to the American economy recently?


Anonymous Anonymous said...

Excellent observations Mikaila. I recently returned from sales calls in New York and ran into an executive who worked for a very steadfast E&P. He mentioned he was out to see several banks who “didn’t want to hear my story.” This from a firm with a consistent track record for growth and success? Makes me wonder what not so prevalent firms are facing? Thanks for sharing!

October 6, 2008 at 7:07 PM  
Anonymous Anonymous said...

I remember, Mikaila! All too well unfortunately! You are referring to a comment that Ken Lay made as Enron went down. He said that the fundamentals of our business are strong...

October 7, 2008 at 4:04 PM  

Post a Comment

Subscribe to Post Comments [Atom]

<< Home