Its October already, and this could be a very exciting and eventful month, for many reasons. None of them good.
For instance, October is the one month annually when lending institutions value the reserves of the oil exploration companies to determine the level of finance they will make available for the next year’s drilling. Many oil explorers have lost large amounts from their business asset values due to the huge fall in price of oil over the last year while many have continued to spend at previous year levels. The risks are high. Lenders will be less generous.
It’s crunch time and many companies will go to the wall.
What does that mean? Well, reducing the number of exploratory wells (and the number of rigs actually doing that has fallen dramatically already this year) and there is less likelihood of finding many new well sites to operate. Less new well sites means less oil production as older sites are continually closing, having been expended, all the time. Especially in the fracking fields. Less oil being produced will eat into stored oil reserves and eventually mean that there is less oil to keep the wheels of industry turning. We all know what that means, don’t we?
2015, the year the upheaval begins, I have been saying all year. There is no doubt that it has already begun. This is just one of those coming upheavals. Take a look around. I am sure you will see more.
This post inspired by: Frackers could soon face mass extinction I love the smell of a good apocalyptic title in the morning. Oh, it’s evening already. OK, I love the smell of a good apocalyptic title any old time of day.