Oil companies trying to stay positive amid pandemic and historic price lows

Oil and gas companies around the globe could not have braced for what is now a reality for many. Between historic lows for oil prices, going as far as hitting the minus, along with a worldwide pandemic, companies are trying to stay positive and hope for better days ahead.

Warren Waldegger has been in the oil and gas industry for over 25 years. Experiencing the many ups and downs the industry has brought over the years, he said no one could plan for what has become of the industry.

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“I don’t know if anybody could anticipate the full lockdown scenarios that have played out here. I don’t think anybody could have planned for that,” said Waldegger.

Currently, Waldegger is the president and CEO of Fire Sky Energy, a private oil producer company that has been operating in Saskatchewan since 2010.

“It’s difficult. We have had to take some early steps to reduce costs. There is definitely a lot of changes that have had to take place,” said Waldegger.

“There are two things happening. You have COVID-19 causing a restricted work environment and you have an oil price collapse. We were hit with a double whammy trying to deal with both,” he added.

Waldegger said Fire Sky was deemed an essential service which has helped the company continue on. The price war between Saudi Arabia and Russia that initially tanked the oil prices and the demand destruction due to COVID-19 have brought on unique challenges for the industry.

“Quite a few things have happened all at once that have resulted in some unprecedented volatility,” said Waldegger.

“Even some negative pricing. I have never seen that before,” he added.

Waldegger is referring to the market on April 21, when for the first time, oil prices were trading at negative numbers. The price for a barrel of West Texas Intermediate oil fell as low as minus-$37.63.

Waldegger said that prices are set on a monthly average, so the index price is a collection of all the trades that happened during the given month.

“When it goes negative on one day, it’s not necessarily what you are getting paid for that month but it obviously has a fairly detrimental impact on the price average for the month,” said Waldegger.

He added the federal government’s approach with the emergency wage subsidy will be helpful to businesses but other than that he feels the oil and gas industry has been left behind.

“I think the feds are trying to stick to their environmental talking points and basically ignoring the significant liquidity issue that is happening in the industry,” said Waldegger.

“I don’t think that is going to be solved by a well abandonment commitment. I think those have fairly minimal impacts on job creation and job sustainability in our industry,” he added.

Waldegger said Saskatchewan should look after itself going forward when it comes to relying on the federal government for getting the industry back on track.

“I don’t think we can sit back and wait for the feds. I think it is quite obvious the feds are not going to help us or our industry,” said Waldegger.

“The province needs to do what is right for this industry within the province,” he added.

Waldegger said while he personally is an optimistic person, it has become difficult to remain optimistic amid all of the above-mentioned issues, on top of the regulations and constant taxation the industry was seeing even before the pandemic and price war.

“We are going to see skilled people leave this industry for good and that is a major concern. That is one of our advantages here in Saskatchewan is having a very skilled and proud workforce,” said Waldegger.

“It is very difficult when you are asked to sit home and you can’t do your job,” he added.

Waldegger said he and his company have taken steps to try and protect his team and remain optimistic through the difficult times the industry is in.

He added while there is no end date as of yet, there will be an end at some point.

“What doesn’t kill you makes you stronger. We have a great province and a great country. In our sphere of influence, we are trying to make sure everyone stays as positive as possible,” said Waldegger.

“There are better times ahead. I don’t think demand is going away, it is on hold though,” he added.

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