Seeking Serendipity: The Benefits of Putting Yourself in Position to Grow Professionally

This post is also available at my LinkedIn page.

Several weeks ago, I made the drive from Midland up to Norman, Oklahoma to attend the Institute for Energy Law’s Hartrick Symposium, designed to show law students and young attorneys career paths in oil, gas, and energy law (shameless plug: please check out the IEL website as they put on great programming in oil, gas, and energy law). Though I am a few years into my career I still have a lot to learn about the industry, and I’m still at a point where multiple pathways are open to me – or will be, once oil prices exit the $40s. Though there were several panels constructed pertaining to various career paths, ostensibly the theme underpinning the whole event was “how to get the job you want.” There was one word that I heard invoked enough to stick out in my mind afterward:


I recall at the time thinking to myself, “serendipity is how you get a job?” Serendipity is defined by Merriam-Webster thusly: luck that takes the form of finding valuable or pleasant things that are not looked for. This was a dissatisfying answer to me – I’m not really one to ascribe much credit to the forces of luck and/or fate. However, in revisiting this line of thinking recently I have gotten on board with the idea that there is serendipity involved in the process, but with certain modifications.

First, even if you are not necessarily on the prowl for that ideal job opportunity, you can put yourself in the best position to “find valuable or pleasant things (i.e., that job you would like) that are not looked for.” Being a known quantity in your field has value; it has been said before but any methods that you can use to get your name and persona out there are worth pursuing. Networking, professional organizations, conferences, et cetera.

Second (and most difficult for me personally), being motivated to make your next move is important but it shouldn’t dominate your thinking. This is certainly a difficult proposition, especially for those who are as impatient as I tend to be; balance is needed, though. I have talked with some people, however, who seem to be dissatisfied with where they are at but not at all interested in doing anything about it. Far be it for me to pontificate about how anybody operates, but it’s not that hard now to keep your eyes open and your ear to the ground using job aggregators (i.e., Indeed, Monster), industry forums, and most importantly, your connections. It pays to look. I doubt most of us are so unbelievably wonderful at our jobs that potential suitors will helicopter to our homes, knock on our doors, and demand that we fill their job vacancy (though I am not opposed to this if anyone out there can make this happen). Strike a balance and keep an eye out.

Lastly, seeking out self-improvement professionally will make you better at your job; this will make you a more attractive candidate. That much is clear to most of us, but “self-improvement” is not “years of experience.” This has more to do with reading new cases, staying current on industry news, and going to seminars/conferences. Every single person who has a job currently is improving in the “years of experience” department – this isn’t a unique criterion.

There will oftentimes be events outside of your control that may loom large in getting your ideal job, but by making a few modifications you can put yourself in a better position to get it. Those willing to put in the time and effort should reap the rewards in the long-term.

Doha Catharsis: More Short-Term Discomfort Should Lead to Proper Recovery

This post also available at my LinkedIn page.

If you totally unplug from energy industry news on the weekend, you’re probably just reading this Monday morning that the Doha foreign oil producers’ meeting ended without a deal. This shouldn’t really have been a surprise, given the manner in which Iran and Saudi Arabia have been throwing geopolitical shade at each other in a commodity-based game of chicken. In fact, there is a pretty reliable pattern of OPEC and foreign non-OPEC participants talking up markets into meetings only to seemingly let oil bulls down when they ostensibly leave without an agreement in place (cue ‘The Price is Right” tuba sounder). We all want energy prices to rise into what I’ve often referred to as a “happy zone” – where producers can profit and jobs are created, but where drivers, shippers and the economy at large isn’t punished with excessive fuel prices.

However, I think that in order to have a better recovery longer term, it’s crucial to go through a proper bottoming process. Had a Doha deal been struck and WTI prices marched up into the $45-50/bbl range, some producers would have been preparing to ramp up production (e.g., Pioneer Natural Resources is expected to start up rigs again at $50/bbl). Allowing shale producers to ramp up said production would benefit those who are financially distressed whose ejection from the industry and energy market is vital for future growth.

Through the ashes of bankrupt and financially-wracked energy companies the seeds are sown for the energy industry to emerge upward like a phoenix (and WTI prices, to boot). If this production kicks back up in earnest before the supply and demand lines on the WTI graphs begin to cross one another (demand preparing to outpace supply), prices are doomed to this $35-45/bbl zombie price range for several years.

The industry seems to be through the worst of it. Just a little bit further.

Double-Down: Using the Energy Downturn to One’s Advantage

We’re over a year into a WTI price crash; hundreds of thousands of positions have been eliminated, rigs have been stacked, and M&A activity has not yet ramped up as typically happens after a price shock (though it should later this year). Many people have left the industry: most involuntarily, but some voluntarily. To be totally candid, I am one of probably many who are really frustrated with the lack of movement in their careers thus far. I happened to join the industry in early 2014, which was not great timing in retrospect, obviously. I came in with no experience – more than two years later, I know now more than ever that I have the skills, abilities and aptitude to succeed in the industry. The only question is trusting the process and believing in the rebound to come.

As I have told many with whom I talk about the energy industry, I truly believe that slow periods are opportunities to bolster one’s repertoire in preparation for the next market upswing. Throughout this downturn, I’ve:

  • Increased immensely my presence on professional social media and at conferences and networking events, as well as becoming more involved with the PBLA and the Institute for Energy Law
  • Acquired more than forty hours of oil, gas, and energy law continuing legal education
  • Written a twenty-five page legal article about the New York fracking ban, a piece to be published about impending reserve-base credit determinations for major energy companies, and a profile piece for Shale Magazine about the Port of Victoria’s role in the Eagle Ford’s rise
  • Maintained a blog (augmented by my posts on LinkedIn) discussing energy and legal issues
  • Written mock title opinions (in lieu of having yet had the opportunity to prepare one for a client due to this current downturn)

This is not meant to be self-aggrandizing; the idea here is to demonstrate that I am doubling-down on the energy industry at a time that others may be questioning their future in it. Although I am personally frustrated with still abstracting title and preparing ownership reports at this point in my career, I realize that title is the backbone to oil and gas law and that honing those skills will serve as an important foundation in my skill set going forward. At the end of the day, my will to demonstrate my work ethic, skills and acumen exceeds my current career-related frustration. I want to continue to be challenged intellectually, grow professionally, and continue meeting and working with the great, hard-working people in our industry.

I encourage anyone reading this who may be questioning their decision to remain in oil and gas to look inside his- or herself for the answer to whether they want to stay; if the answer is a resounding “yes,” then keep chipping away, get to networking events, and work hard to get to where you want to be. The cream will rise to the top once we emerge from these doldrums in which we find ourselves, and the work done during these darker times will reap reward in the times to come.

“Chop that wood.”

This post is also available at my LinkedIn page.

A Wolf in Sheep’s Clothing: The Risk in Disguising Self-Promotion (“Right Hooks”) as Content (“Jabs”)

This post is also available at my LinkedIn page.

I’ve been thinking a lot lately about ensuring that I am getting my overall profile and message out to as many friends, colleagues and industry cohorts that I can – as a curator for interesting news and developments in the industry, and as someone who puts considerable thought into current issues in discussions and posts. I am not only interested in oil and gas law, however – though it is outside my bailiwick, the concept of content creation and dissemination through social media is very interesting to me. I am a fan of Gary Vaynerchuk (website here), and have made it an effort to increase my profile and exposure through extensive networking, honing my craft, and doing my best to serve others. There is one thing that Gary preaches that I really ascribe to – giving more than you take and providing value in terms of creating content without expecting anything in return, but occasionally making explicit asks; as he refers to it, “jabbing” and “landing right hooks” (providing great content, and then making an ask through a call to action).

Something that I have noticed lately amongst my oil and gas brethren is providing smatterings of content that are in actuality nothing more than veiled self-promotional solicitations or advertisements to engage their services. In my opinion, this sullies the purpose of content creation through providing considered thought and contemplation; it smacks of inauthenticity. That is not to say that there isn’t a place for telling potential customers or clients that you can provide a service, but to disguise it as content is not the way to do it. Jabs and right hooks are two distinct moves: a boxer jabs, jabs, jabs…then occasionally goes in for a right hook. Consistent jabbing opens up the avenue for an occasional right hook. Any boxer who goes into the ring flailing wildly looking to land nothing but right hooks is going to look like a fool, and I think the analogy is apt – if your blog posts or your content is nothing but self-promotional, you’re not going to win.

I would encourage anyone interested to examine the entirety of my published blog posts. If one does this, you’ll see that not one of my posts is a right hook – I’m exclusively jabbing. I push my own content because I enjoy thoughtfully considering the issues and topics in my industry, and my long term goal is to become a thought leader in the oil and gas space. Surely, I could easily turn a blog post about developments in NPRI interpretation in Texas case law into a solicitation for providing title opinions, but that wouldn’t give my readers value – people who know who I am (or who view my LinkedIn profile page) can probably surmise that I could provide such a service. Even after regularly aggregating industry content and publishing my own for over a year, I don’t have the audacity to go in for a right hook yet – I have not yet earned that privilege. In fact, I am looking to expand even further in my content creation through the use of video and public speaking about many of the same topics that I write about. And when I say “content creation,” I mean putting my own unique spin on news and case law – content aggregation is also part of the strategy, the curating of (hopefully) interesting but not necessarily obvious articles and reports that those in our industry might find intriguing. I would be remiss without observing here that posting memes and order-of-operations math problems represents a lack of understanding of why most professionals use LinkedIn, do nothing to build and foster relationships among said professionals, and fall into neither category of meaningful content creation or aggregation. One would be wise to repudiate such methods in building an awareness around her professionally.

In the end, it’s about how you want to use social media – as a short term tool for a slight uptick in business, or a long term tool in creating value for your readers and potentially becoming a thought leader in your industry. LinkedIn itself can play a key role in that strategy in terms of spreading your content. For me, it’s a clear decision…I am playing the long game.

Probable FOMC Interest Rate Hike(s) in 2016: Underestimated Headwinds for WTI?

This article is also available at my LinkedIn page.

Generally, I am of the belief that as production is being curtailed in America and globally, eventually the market slack will tighten and the demand will begin to outpace the speed with which producers can get certain wells online. To be sure, there are many DUCs in various shale plays ready to roll (drilled but uncompleted wells), but I still believe that the oil and gas “illiterati” is failing to account for production curves – the sharp decline in a horizontal well’s rate of production after a few years. Yes, the costs are sunk once a well is drilled, but the notion that these shale wells will maintain their early pace in perpetuity is misguided. But that’s a different topic.

Something I’ve noticed more recently, but which doesn’t seem to be getting a lot of attention at least in terms of those whom I talk to regularly, is the interplay between 1) WTI pricing, and 2) the relative strength of the U.S. Dollar versus other foreign benchmark currencies (China’s yuan, Russia’s ruble, et cetera). The Bank of Japan recently unveiled a negative forward interest rate related to certain instruments, as did the European Central Bank. Meanwhile, the Federal Open Market Committee, the governing arm of our Federal Reserve, attempted to lift off from a zero percent interest rate that has been in place since the “Great Recession” several years ago; however, global financial issues are injecting uncertainty into how strong the global economy actually is, and whether the United States can march upward headstrong without considering the consequences in a globalized world.

It currently appears that the FOMC will at least be tapping the brakes in 2016 from what it had originally planned in terms of raising interest rates several times. At this point, many market prognosticators seem to land at there being a potential for anywhere between zero to two hikes. Any hikes may weigh against WTI crude oil pricing: since WTI is priced in dollars, and interest rate hikes make a country’s currency stronger relative to other currencies, it would make WTI cheaper in other currencies, thereby reducing the relative sale price of the crude oil in dollar terms. Combine these potential rate hikes here with many institutions charged with managing currencies actually going down to zero percent interest rates, or even negative rates, and that has a multiplicative effect on this headwind.

Ultimately, I wouldn’t forecast this situation as a great potential weight depressing WTI prices going forward, but it will apply some downward pressure to such prices for as long as this interest rate disparity between the United States and other countries continues. At this point, this is probably more of a footnote to the supply vs. demand issue we are currently working through, but still a worthy topic of discussion to understand how global markets can influence what a barrel of West Texas Intermediate crude oil can sell for.

Valuing E&P Company Proved Reserves as Cost Curves Decline – Insolvency in Mirror May Be Closer Than It Appears

This article can also be found at my LinkedIn page, and will soon be published in a forthcoming Permian Basin Landmen’s Association newsletter.

In the past year, there has been ample discussion about the role of asset-based lending redeterminations as they pertain to the availability – or unavailability – of funding on the capital markets through existing credit revolvers[1] for many oil and gas companies. The borrowing bases utilized in these funding structures are typically calculated through lender price decks that consider both the amount of proved reserves a company has at a given time, as well as the going price for the reserves themselves on the open market. In good times, capital is plentiful and an oil and gas company’s borrowing base burgeons under reasonable valuations as determined by commodity values. In these times of distress in the oil and gas markets, though, capital has largely dried up and the valuation of a company’s reserves is becoming critically important, as that valuation directly affects their borrowing bases under the credit revolver.

Valuation of Proved and Unproved Reserves

Unproved reserves are easier to classify, as they include the remainder of the reserves that cannot be classified as proved reserves – they are more speculative in nature, and are not given great weight in the valuation process.[2] Proved reserves are generally separated into three categories.[3] First, proved developed producing (“PDP”) reserves are those currently generating cash flow from production. Second, proved developed nonproducing reserves (“PDNP”) are those that require some sort of further work or action before being productive; one might think of a shut-in well as a prime example. Lastly, proved undeveloped reserves (“PUD”) are those expected to be recoverable but at a future time, after new wells are drilled on undeveloped acreage or existing wells are brought up to full operability. With regard to PUD reserves, they are generally not included in the valuation of proved reserves unless a pertinent well will soon be brought up to operating standards and production will subsequently be achieved.

Both proved and unproved reserves in the abstract are not a controversial notion – a company owns certain properties, petroleum geologists and engineers ascertain how rich with hydrocarbons these properties are, it is determined how feasible acquisition of the hydrocarbons would be, and the numbers are crunched. However, the more critical variable in the valuation formula is the price of the asset or commodity upon which the valuation is ultimately derived. These valuations can vary greatly – consider two companies operating in two different hypothetical pricing environments, but with exactly the same proved reserves. In hypothetical pricing environment “A,” the company’s proved oil reserves (which will be discussed infra) are viewed in the lens of $30/bbl oil (as is currently the case); by comparison, pricing environment “B” features those same proved reserves but instead in an $80/bbl oil environment. The consequence of this is that the company’s reserves in the latter pricing environment effectively have over double the valuation. In and of itself this is not a groundbreaking concept, but companies seem to be getting more adept at massaging this variable in an attempt to appear more financially robust and perhaps even artificially prop up their valuation for the purpose of preventing reduction of lent capital under existing revolving credit facilities when commodity prices begin to decrease.

Fall 2015 Borrowing Base Redeterminations – Dodging a Bullet

As 2015 progressed into spring and summer, it became clear that oil prices would continue to languish. This posed a challenge for highly levered E&P companies, whose borrowing bases could potentially have been greatly constricted by their lenders as a result of the pricing slide. As consensus built around the likelihood of forced M&A and bankruptcy filings as a result of decreases in these borrowing bases, the industry was somewhat chagrined when the redetermination process came and went with far fewer borrowing cuts than expected.[4] Those waiting for the financial pressure to build won’t have long to do so, as the next wave of redeterminations will take place this coming spring (in April for most borrowers). The current sustained period of crude oil in the $30s will pull down many lending price decks and summarily should result in more year-over-year reductions in borrowing bases.[5]

Ultimately, the wait for deal flow to begin in earnest has become more protracted than originally expected; the proverbial axe has not come down upon the number of companies that some had expected that it would, and more companies are eking their way through this current period in pure survival mode. Those companies precariously dangling over the abyss of insolvency are generally widely known in our industry, and potential buyers of assets – or the distressed companies outright – seem content to wait for alternative options to acquire assets on a much cheaper basis, such as through §363 sales under Chapter 11 of the Bankruptcy Code.

— — —

[1] Credit revolvers “allow the borrower to buy goods or secure loans on a continuing basis as long as the outstanding balance does not exceed a specified limit.” Black’s Law Dictionary 424 (9th ed. 2009).

[2] Unproved reserves can be further bifurcated into “probable” reserves (those approximately 50% likely to be recoverable), and “possible” reserves (those approximately 10% likely to be recoverable). Reserve Based Loans: Issues and Considerations, Practical Law, (last visited Feb. 22, 2016).

[3] Alex W. Howard, and Alan B. Harp, Jr., Oil and Gas Company Valuations, 28 Bus. Valuation Rev. 30, 31 (2009), available at

[4] In a Thompson Reuters review of 61 credit revolvers whose borrowing bases were criticized by lenders in Fall 2015, almost half were reduced; however, one-third of them were reaffirmed, and the remaining 18% were actually increased. Of the 30 that were reduced, 11 were reduced by 20% or greater. See Reserve Based Lending: How Bad Were the Fall 2015 Borrowing Base Redeterminations, Practical Law, (last visited Feb. 22, 2016).

[5] A recent study by Haynes and Boone LLP analyzed what various lenders and borrowers predicted for the Fall 2015 and Spring 2016 redetermination periods – those lenders and borrowers surveyed forecast approximately 68% of current oil and gas related borrowing bases would be decreased in Spring 2016, and that these decreases would average about a 26% reduction as juxtaposed against Fall 2015 bases. See Presentation, Haynes and Boone, LLP – Borrowing Base Redeterminations Survey: Spring 2016, (Jan. 19, 2016),

What to Glean from Various Q4 2015 E&P Earnings Calls

This article also available at my LinkedIn profile page

More than a year into the current oil pricing bust, exploration and production companies are now shifting from an optimistic viewpoint to one of realism and pragmatism. Difficult choices now need to be made, and these companies in recent earnings calls have outlined their plans to weather a generational industry storm; their plans differ greatly based on how much their cash burn is, the strength of their overall balance sheets, and how greatly their assets are levered against massive credit revolvers.

>Anadarko suggested this morning that it will consider cutting its dividend, noting that its yield is too high for its liking, in light of that company’s share price being halved in the past year. Typically companies are apt to vigorously defend their ability to provide a dividend, often choosing instead to dramatically reduce workforce for the purposes of cost reduction – if this comes to fruition, expect the company’s share price to take even more of a hit. MorningStar recently evaluated Anadarko’s with a “BBB” rating, signifying a “moderate default risk.”

>ExxonMobil’s position in the pantheon of the oil and gas industry is well-deserved, having proceeded deliberately but conservatively during both good times and bad. Their debt-to-equity ratio is quite low compared to other industry cohorts, and the relative strength of their balance sheet would allow for targeted acquisition activities should favorable opportunities arise. ExxonMobil forecasts a 25% drop in YOY decline in capital spending; the decline itself itself is not surprising, but this seems to be less of a ratchet-down in spending than other companies. However, they are conserving cash in other ways, such as suspending a previously planned share buyback program – this will help save nearly a billion dollars in the short-term future. They also report their production as having increased approximately 5% in Q4 2015, reflecting the view that they can continue to aggressively produce on the right opportunities, so long as capital spending is kept somewhat in check.

>Lastly, BP reported a brutal 91% drop in earnings in Q4 2015, being impaired by persisting legal costs pertaining to the Deepwater Horizon disaster in the Gulf of Mexico, as well as being mired in unprofitability in its Mexico operations. They are choosing to curtail cash burn by implementing a previously announced cut of 4,000 employees in their E&P operations; this does not include an additional planned cut of 3,000 more employees by the end of 2017.

Ultimately, this is a tough time for the industry, and such sentiment is reflected by the executives of major oil and gas companies worldwide in their investments calls. Gleaning how certain companies are preparing for the downturn and tackling financial challenges can paint a picture for the industry, as well as juxtaposing the viewpoints and commentary of companies in positions of relative strength (e.g., ExxonMobil) versus those who are a bit more distressed (e.g., BP), and even those who very well may declare bankruptcy this year (e.g., Chesapeake).

I would point out to any readers that Oxy reports this Thursday (February 4, 2016) at 10AM EST, 9AM CST (available here) – this is a company that, in my opinion, has wisely divested itself of ancillary assets and doubled-down on its position in the Permian Basin. It is also in decent financial shape, and their viewpoints on the industry currently would be interesting to consider. Also, consider listening to the EOG Resources earnings call as well – this is scheduled for Friday, February 26, 2016 at 10AM EST, 9AM CST (available here).

Buckle Up: 2016 Will Be Wild & Unpredictable

This post is also available at my LinkedIn profile page, located here

When crude oil prices started their dive down in late 2014 and continued during the start of 2015 until ultimately realizing 3- and 4-handles, it became pretty apparent to me that 2015 would be a volatile and painful year of the industry. Volatility has been in ample supply in the commodity market and overall financial market. Oil prices over the past several months have made moves higher and lower on an almost-daily basis, rarely content to sit idly. Several prognosticators in 2H 2015 publicly called for bottoms in oil, and then watched as prices fell through the floor of what was believed to be the figurative pricing basement. In an interesting sea change, the “global conflict/risk” factor that could typically be counted on to cause small spikes in pricing are now doing the opposite due to the context of the current strifes – countries in the Middle East tripping over each other to achieve maximal oil production output.

Most of you have probably heard the adage that money is made during the downturns, before the subsequent booms – this is the time where the critical make-or-break decisions are being made, and the funny thing is that we won’t know which ones are the prescient ones for a period of time. There was much expectation industry-wide that overleveraged exploration companies would begin experiencing great financial strain when lenders and banks would inevitably reduce borrowing bases and revolving credit facilities during the Autumn asset base redetermination process. However, much to our collective chagrin, most banks and lenders balked at tightening the screws; the companies that thought the end was nigh were able to kick the proverbial can down the road, but this contentment is fleeting.

It is now 2016; hedges are expiring, banks and lenders are growing impatient, and the price of oil appears to be maligned in a price range that it will probably be stuck in for most of the year. Several companies have already filed for Chapter 11 reorganization (Swift Energy being the one of the latest). We heard that M&A activity would ramp up in 2015, but this never really panned out. Now 2016 is being heralded as the real year of oil and gas industry M&A. I would argue that the M&A will still come in under what people are calling for: any company that is in the universe of being financially distressed will not be an attractive candidate to be acquired. Companies in good financial standing will just wait for these distressed (or soon-to-be-distressed companies) to collapse and die, circling like vultures and waiting for sales of assets to benefit their secured creditors for pennies on the dollar. I expect companies that have asset profiles that would be complementary and more synergistic as one to at least kick the tires on mergers.

2016 will be an interesting year in our industry. There will certainly be companies that are taken down this year, and we will likely look back on several shrewd and well-calculated moves that occur this year as being catalysts for the oil and gas powerhouses of the next oil boom, whenever it might be.

Analyzing New York’s Energy “Industry” (or lack thereof) Through the Lone Star Lens

This post is also available at my LinkedIn page.

Earlier this year I wanted to sate my desire to write and publish a law review-esque article as that has been a goal of mine for a few years now, and I am pleased to say that I did and it is now ready at this link. I waited until I thought of a topic that would be both professionally interesting to myself and others, as well as a learning experience for me – it’s not a fun exercise to write something that long on something that doesn’t interest you. Given that there has been a lot of activity in my home state of New York in terms of hydrofracturing first being under a moratorium – and then outright banned per a state-issued report with little evidence but many general postulations – I thought it would be interesting to analyze the circumstances around it from the viewpoint of the general energy market downturn that we have been experiencing since late 2014. More specifically, I knew that there was some talk of legal challenges being waged against New York State, but due to the current environment I believe and write that no meaningful legal challenges will likely be fought against the ban.

In 2014 and early 2015 I had read quite a bit on this issue and debate, but much of it was either New Yorkers with no real energy industry experience talking at length, or those with more energy industry experience who may not have been as familiar with New York as I was. In that way, I wanted to lend a somewhat fresher perspective on the particular topic – a former New Yorker who is now a Texas oil and gas attorney / landman, and perhaps can flesh out some of the subtlety and nuance in the debate to which others back home would not necessarily be privy. My colleagues and cohorts know that Pennsylvania, Ohio, and West Virginia are very active states for Marcellus and Utica oil and gas production (mainly gas production), but some are not aware that a large portion of New York State rests on those shale formations, as the below picture demonstrates (credit to

Ultimately, my goal was to get the article published in a law review but I knew that realistically I faced long odds. I also sent it to industry publications like AAPL’s “Landman” magazine, telling them that a pared down version might be a good read for other colleagues in the industry. Ultimately, I chose to publish it online – I spent several months writing it, and while I don’t think that it’s groundbreaking or a must-read, it does provide analysis of a debated issue from a fresh perspective.  Thank you in advance to anyone who does decide to read it in part or in whole.

Waves of Austerity: A Review of the U.S. Oil & Gas Industry in 2015

This post is also available at my LinkedIn page.

Now that it is November and we’ve arrived at the home stretch of 2015, it seems apropos to reflect on what has happened in the industry this year.

Obviously the spot pricing for WTI crude oil plummeted off of a proverbial cliff at the beginning of the year, a process which began in earnest about a year ago. As we all know OPEC flipped their script and, rather than their customary line of decisions to restrict oil production to prop up prices, they recently chose instead to preserve their market share and not curtail production in any way. The high times my industry cohorts with more experience fondly recall for the several years prior to this year came to a sudden and shocking conclusion. U.S. shale producers have proved their resilience in cutting costs in an effort to maintain profitability (largely through pricing reductions borne by various production and service companies); regardless of recent technological advancements and ingenuities, thousands upon thousands of jobs in our industry have been cut.

To be certain, not all of the jobs cut belonged to Americans, but many have. This will invariably result in a profound lack of experience in the sector when things begin to improve – many of those being laid off (especially in the land/legal industry subsections that I am particularly familiar with) are either at/near retirement age and will phase themselves out, or are just not in a position to eke their way through an industry downturn. Those of us who survive will be in a unique and advantageous position, as those in their 20s, 30s and 40s step up to take the place of those who have exited the industry.

In terms of market dynamics, it would seem that it will take much of 2016 for the slack in the oil markets to tighten and result in a meaningful rise in pricing. Production cuts in the United States (as well as in other countries) are beginning to put a floor of support under WTI and Brent prices, but it will take more cuts in conjunction with increasing demand to cause improvement. References are continually made to rig counts, which I believe to be mistaken reliance based on the assumption that all rigs/wells produce identical amounts of oil (but I’ll sidestep a full dissertation on the topic). Even in a worse situation seemingly are the natural gas markets – though the incomprehensible stockpile in the Northeastern United States via the Marcellus and Utica shales shines favorably in terms of American energy independence, it’s extremely tough sledding for natural gas producers trying to extract it and still make a profit.

Late 2014 and early 2015 were akin to crashing through several floors of a building and ending up in the basement – the drop-off was scary and tumultuous for those of us in the industry. But now the dust has settled, and we find ourselves having to be more austere and cost-conscious than any time in recent memory. For some time it was “go go go;” alternatively, now is the time to reinforce your networks and take the time to learn additional skills. The efficiencies and expertise being cemented and created now will have a cathartic but necessary effect on the American energy industry going forward.