American Oil and Gas Reporter - July 2015 - 158

ConventionCoverage: Oklahoma Independent Petroleum Association

Former Oklahoma congressman J.C.
Watts (left) visits with Mike Terry, president
of the Oklahoma Independent Petroleum
Association, before his keynote presentation at OIPA's annual meeting in Las
Colinas. Watts now is a lobbyist for the
Domestic Energy Producers Alliance.

companies exceeded their expected production and so national output registered
sequential growth of 4 percent over the
projected 1 percent gain. Total non-OPEC
production growth in 2014 was 750,000
barrels a day, while 2014 demand increased 700,000 bbl/d.
One key difference between today's
recovery and the ones following the 1998,
2001 and 2008 downturns is that OPEC
has changed its strategy, Dietert said.
Coming out of the earlier dips, the cartel
immediately cut production to bring
supply and demand back into balance.
This time, OPEC decided to maintain its
market share and may even be reaching
for more customers, he reported.
"When OPEC said $100 a barrel oil
was fair for producers and consumers, it
turned out to be just a little bit more fair
for producers," he said. "There is a lot of

production still coming into the market.
This is an industry of long lead times,
and once you crank the machine it takes
a little time for it to slow."

Service Side
Following Dietert's presentation, Simmons' oil service research director John
Daniel said the U.S. land drilling rig
count was expected to increase by 350400 rigs over the next two years. Supporting that projection with anecdotal
evidence, he said he had talked to three
Permian Basin operators either seeking
or contracting for multiple rigs for later
this summer. Also likely to increase in
intensity later in 2015 is production from
the U.S. inventory of drilled but uncompleted wells, Daniel predicted.
Because of what he called unsustainable
low margins in the oil service sector,

LEFT: Ronnie Irani, (left) chairman of the Oklahoma Independent
Petroleum Association, presents the OIPA Partner Award to EnergyNet Inc. Ethan House, EnergyNet's Oklahoma City-based vice
president of business development for the Mid-Continent region,
accepted the award at the OIPA annual meeting, held June 5-9 in

158 THE AMERICAN OIL & GAS REPORTER

Daniel said he expected short-term unfavorable pricing conditions for providers.
"The problem for the oil service sector is
there is way too much capacity," he said.
"It does not matter which segment you
look at-land drilling, well servicing, pressure pumping, coiled tubing-everything
in the U.S. onshore is oversupplied. That
will be a problem as we go through this
recovery."
Several service companies are seeking
bankruptcy protection. He added producers
understood an unprofitable service industry
could not reinvest in people or equipment,
which would harm field activity after the
downturn.
"Oil service companies are telling us
the industry panic we saw in the first
quarter has transitioned into what I call
cold-blooded realism. The nervousness
is gone," Daniel said. "Management teams
have adjusted, and actually the mood is
good. That is surprising, given that the
returns are terrible, but that is good
because they feel like they can manage
better now. They have a bit more visibility."
Industry Achievements
In the keynote presentation that closed
the OIPA meeting, former Oklahoma
congressman J.C. Watts said people had
to perform at the highest level when life
presented a "right-now moment."
"This industry is in a right-now moment," offered Watts, who lobbies for

Las Colinas, Tx. RIGHT: Irani congratulates Kim Hatfield after presenting him with the OIPA's Member of the Year Award. Hatfield,
president of Crawley Petroleum Corp., was recognized for his
efforts as chairman of the association's Regulatory and Environmental Committee.

American Oil and Gas Reporter - July 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - July 2015