I read an article today stating the reasons why the price of oil would never stay over $100 a barrel for very long. It reminded me of a time during the late eighties, early nineties when oil prices were much lower. There was little activity in the oil patch, many rigs and completion units stacked away, gathering rust.
I was an independent geologist at the time, putting together drilling prospects and selling them as “open acreage deals” for a small finder’s fee and royalty override. At the time, I had more ideas then I had companies interested in looking at them.
I had heard of a small oil company in
The company, it turned out, was located in
I spread my maps on a worn kitchen table converted for use as a conference table and began my spiel. Along the way, I covered every facet of the prospect from offset production to economics. From the glazed expression on John’s face, I could see that I wasn’t making my point. Finally, he leaned back in his chair and folded his arms.
“Eric, I like your deal and your geology is good, but to make it work we would need fifteen dollar oil.” John shook his head and glanced out the window as the brakes squealed on a passing dump truck. “We both know we’ll never see fifteen dollar oil again.”
John’s proclamation was made and there was little else for me to do except fold my tent and head for the door, searching for some excuse for my failure to tell Anne on the trip back to
Yesterday, oil exceeded $98 dollars a barrel and you only have to open any newspaper or magazine, read any energy blog, or listen to the oil pundits on CNN, MSNBC, etc. to realize that everyone has an opinion on where prices are headed. Like John, most of them haven’t a clue.