U.S. oil and gas employment declines following OPEC decision
The oil and gas industry was thrown for a loop nearly a year ago when OPEC made a decision on Thanksgiving Day of last year to defer from its traditional role of maintaining price stability in order to protect market share. The decision sent oil prices plummeting, and has kept them at less than 45% of their peak value, seen in June 2014.
Prices for U.S. benchmark WTI crude were at $46.49, while Brent crude stood at $48.79 as of 2:00pm EST. Those prices represent 44% and 42%, respectively, of the crudes’ values in mid-June, which were $107.26 for WTI on June 20, and $115.06 for Brent on June 19.
Lower prices have forced many oil companies to cut their workforce in a bid to keep afloat. While overall employment in the U.S. has improved to 5.1% unemployment in September 2015 from 5.8% in November 2014, employment in the oil and gas sector has fallen by 5% in the same time period.
Going back to November 2013, a year before the OPEC decision, employment in the oil and gas industry had been trending up. From November 2013 to the following year, employment in the sector increased by 3.6% to 201,000 from 194,000, according to data from the Bureau of Labor Statistics (BLS). Employment began to rapidly fall off following the decision, however, with monthly data showing continuous declines through September, the most recent data available on employment in the sector.
$80 billion in untapped potential
Despite the rapid declines in overall employment in the oil and gas industry, there’s a well of $80 billion in untapped private equity ready to come into play.
“The difference between 1986-‘87 and today, there was no private equity back then,” David Preng, founder and president of Preng & Associates, told Oil & Gas 360® during an interview. “Today there is $80+ billion in unlevered cash sitting in private equity’s coffers looking to be invested. Right now, we’re working for three different PE groups who’ve asked us to find leadership teams.
Right now, we’ve got private equity firms coming to us saying, ‘I’ve got capital to invest and I neet to achieve a rate a return. I need teams who can identify and capitalize on projects.’ The PE firms are out there scouring the market for talent. They’re hiring us to build teams for them: ‘Get someone to be the CEO and make sure you supplement his/her skills with quality engineering, financial, geoscience, land and business development talent’. That’s the crux of the teams that we’re looking to build out.”