The New Economics of Oil and Gas: Implications for Texas and the - PowerPoint PPT Presentation

The New Economics of Oil and Gas: Implications for Texas and the U.S. Presentation to the DFW Turnaround Management Association Bernard L. Weinstein, Ph.D. Associate Director, Maguire Energy Institute Cox School of Business Southern Methodist University Dallas, Texas February 18, 2016

BOOM IN THE OIL PATCH

BIRD’S EYE VIEW OF A FRAC SITE IN THE PERMIAN BASIN

GROWTH IN OIL PRODUCTION: US v. OPEC

BATTLE OF THE SHEIKS VS. SHALE: WHO WILL BLINK FIRST?

WHAT DO WE MEAN BY “BREAKEVEN?” Source: Wood Mackenzie

HOW LOW CAN IT GO?

$400 billion of deferred E&P projects worldwide

MANUFACTURING OUTPUT IS FALLING. WHY?

350,000 Announced Layoffs and Counting: Is This the New Normal?

LAYOFFS AND BANKRUPTCIES 36 filings in 2015

Crude Oil Production, thousand barrels, August 2015 120,000 100,000 80,000 60,000 Crude Oil Production, thousand barrels 40,000 20,000 0 TX ND CA NM AK CO OK WY LA KS 1 2 3 4 5 6 7 8 9 10

Texas Oil Production and Prices Since 2000 $160 4000 Texas Daily Oil Production Price of Oil in $2015 in 1000s of Barrels March 2015 $140 3500 P oil $120 3000 June 2014 $100 2500 $80 2000 $60 1500 Q oil $40 1000 $20 500 $0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

A PICTURE THAT SPEAKS FOR ITSELF

IDLED OFFSHORE DRILLING RIGS-GULF OF MEXICO

“Oil Slump Hits Houston Home Market” Wall St. Journal, January 19, 2016

IS CHEAP GAS GOOD FOR AMERICA?

THE TRUCKING INDUSTRY IS ON A ROLL

Freight Loadings Forecast • Expect 2006 levels to be exceeded in 2016 U.S. Truck Loadings Originated 800 Millions of Loads Originated 750 2006 Peak 700 650 600 550 500 450 400 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: FTR Trucking Update Report

2015 WAS A RECORD YEAR FOR AUTO SALES

AIRLINES EARNING RECORD PROFITS $22B

IS THIS WHERE WE’RE HEADING?

UNCERTAINTY #1: IS THE CHINESE ECONOMY IMPLODING?

UNCERTAINTY #2 CAN IRAN REALLY BOOST PRODUCTION BY ONE MILLION BBD IN A YEAR?

OIL PRICES AND INVESTMENT: A 65-YEAR PERSPECTIVE