Obsidian Energy is a mid-sized natural gas and oil company that is based in Calgary, Alberta, Canada. The company has a healthy portfolio of resources, including ownership of portions of a huge oil reserve in Alberta that is boasted as one of the largest reserves in the world. While the company suffered a number of setbacks after the price of oil crashed in 2014, the are making quite the comeback and new industry surveys reveal that the future for companies like Obsidian are looking better than was previously expected.
After the price of oil crashed in 2014, Penn West, as the company was then called, also experienced an additional blow. The company found themselves mired in a number of lawsuits in both Canada and the United States that stemmed from what were referred to in the legal documentation as “accounting irregularities.” These twin blows to the company almost spelled its demise, but a dramatic restructuring of the company, as well as a big sell off of a number of key assets, th company was able to stay solvent, and under new leadership, re-branded themselves as Obsidian Energy.
Since the restructuring of the company, it has seen a steady growth in cash flow and a rebound from what seemed like sure failure. But even though the company weathered the proverbial storms of lawsuits and the drop in the price of oil, the instability of the oil markets have had a profound effect on all players in the oil and gas industry, regardless of their size and asset holdings. Obsidian Energy and other energy companies are dealing with new innovations and the introduction of more automated machinery, which led many to have a negative feeling about employment numbers in the coming years. These are not unwarranted concerns either as there has been a loss of jobs in many companies and a significant decline in the demand for new employees in others.
However, Rig Zone recently conducted a survey of some 1,000 people in various parts of the oil and gas industry and they found that people have a more positive outlook on the future of the industry than they did at this time last year, something that is music to the ears of the folks at companies like Obsidian Energy. Industry surveys such as this provide incredibly valuable information for analysts inside and outside the industry. The survey respondents were taken from Rig Zone’s member database and were asked a variety of questions about their outlook for the future, as well as year in review questions. The survey was given using the SurveyMonkey platform and was undertaken via email.
One area that has led to poor outlooks is the price of what is called Brent crude oil. Lot of new oil coming on the market, such as what we saw when various OPEC companies “opened the taps” a few years ago, had the effect of dramatically suppressing the price of oil. OPEC companies and Russia agreed that they would limit their production as a means to help stabilize the price of oil and its related products. This action has helped to stabilize the markets and in November of 2017, the countries all agreed that they would extend the limited production capacity at least through another year.
This has helped to add a bit of confidence to people working in industries like Obsidian Energy, as these actions are likely to help the world avoid another dramatic crash in the price of oil like was seen a few years ago. While jobs have still been lost, there is an indication that the level of loss is slowing and there is a lot of confidence among industry insiders about the future market for oil and oil related products, especially with new innovations, improvements in efficiency, safety, and the like. Many companies actually even saw a small amount in growth in the need for more employees, and while the growth was slower than what has been seen in boom times, it is steady, which is a positive sign for the future of the industry.
There are still a lot of hurdles for the energy industry to overcome if it wants to see future growth like what was seen in the past. There are even people within the industry that say that the boom times of the past are not something that we should aspire to, but that the market can bounce back to a greater degree than what has currently been seen. This involves ever-changing innovations and the ability to be flexible in an unstable market. This requires entrepreneurial spirit, a focus on education and training, as well as a keen understanding of financial and commodity markets. There is a cautious optimism among higher ups in the oil and gas industry as there is an ever-growing need for their product. If international relations and oil production quotas can be permanently stabilized, it will help further increase the future confidence of medium-sized oil production firms.
