OPEC announced last week an agreed upon "Freeze" in oil production, but not all members of the group are in agreement with this strategy. As we have seen prices fall from over $100 barrel to a 12 year low at below $30 barrels it has left many US Shale plays uneconomic and the market unsure of the future. The initial announcement of the freeze peaked intererest of many US producers but in looking deeper into the news it is not clear if two of the major players in Iran and Saudi Arabia are on the same page moving forward.
As we have learned over the last 85 years the oilfield runs in cycles that are beyond our control. We focus on what we can control and improve upon during downturns - customer relationships and improvement in our process to be ready for the next market cycle to begin.
Though Hutchison Hayes Seperation does believe that we have seen the bottom earlier there is certainly no guarantee that we will not stay in the pricing range for a number of months. To this regard, HHS continues to believe that we are still many months away from any meaningful recovery (4th quarter of 2017 to 1st quarter of 2018).
We have seen an increase of in-house repairs throughout 2016 even with customer budgets for maintenance and repair being practically nonexistent. With all of the capital equipment laying idle there has been a significant decrease in the overall focus on equipment maintenance as operators are able to get by with minimal repairs and cannibalize existing equipment for parts.
Our immediate outlook for the US Shale market remains bearish for the remainder of 2016 and into 2017. HHS has positioned itself to support our customer base in regards to repairs, field service and replacement parts. We have one of the largest ready to move inventories in the industry and are prepared to aid our customers in anyway possible.