After 3 tough years of cost cuts and downsizing, the oil industry is seeing signs of new life in a lower-price environment. Companies are hiring again, salaries have rebounded, and large producers are posting profits.
The oil and gas industry is finally hiring and may begin to face worker shortages in some areas. Since oil prices crashed in 2014, more than 440,000 jobs in the industry have been cut worldwide. But next year, almost 90% of employers expect that staffing levels will either stabilize or increase in 2018, according to a survey by NES Global Talent and oilandgasjobsearch.com. Almost 60% of employers expect to recruit significantly over the next year. Of the companies that are hiring, 23% expect to increase their workforce by 5%, 19% plan to increase staffing by between 5 and 10%; and 17% expect to increase hiring by more than 10%. Almost half of employers expect salaries to rise.
SPE’s annual industry salary survey also paints a brighter picture. Industry professionals reported average total compensation of $194,649 this year, a $9,000 increase from 2016 although still down from 2014 and earlier. Compared with 2016, mean base pay, other compensation, and total compensation all rose in 2017.
Oil prices have finally crossed the $50/bbl threshold, with Brent over $60/bbl in mid-November. Rising prices, along with sharp cost cutting, are leading to operator profits. The supermajors—including ExxonMobil, Total, Chevron, Shell, and BP—all posted healthy third-quarter earnings and solid year-over-year improvement in cash flow and profits. In delivering their earnings, both BP and Shell said they would remain profitable even if oil prices dipped into the high-$40/bbl range. The large service companies, such as Schlumberger, Baker Hughes, and Halliburton, were more circumspect in their outlooks but see a foundation laid for better days ahead.
OPEC also sees positive days ahead in its latest forecast. It predicts that global oil demand in 2018 will grow and that non-OPEC production will not increase as fast as previously thought. Along with its production cuts, that will continue to reduce excess oil in storage. OPEC, Russia, and a handful of other producers agreed to cut output by 1.8 million B/D, and compliance with the agreement has been stellar. OPEC’s report concedes that it did not kill off North American shale when it flooded the market with oil 3 years ago, and that shale will continue to see strong supply growth.
A new International Energy Agency reports confirms OPEC’s conclusion on shale’s staying power. The IEA said the supply surge in shale output will lead to the largest gains in the history of the industry. By 2025, the US will match Saudi Arabia in oil production and surpass the former Soviet Union in gas output, according to its World Energy Outlook. The US oil industry “weathered the turbulent period of lower oil prices since 2014 with remarkable fortitude,” according to the report.