Drilling Ahead: When the recovery? Curmudgeon Pessimist or Unrepentant Optimist?

By Mike Killalea, editor & publisher

This is a tough old industry, with more than its share of ups and downs – particularly the downs, which historically have wielded an iron upper hand. One of the recurring wonders in this business is the valiant optimism of its people.

Our endless reservoir of optimism sang out like the proverbial fat lady when I reviewed a recent survey on DrillingContractor.org.

We wondered: With the North American rig count falling into the low four figures – and, at press time, below 1,000 – are we at bottom? Is recovery near?

Fully 83% of respondents fall into the category I will describe as either “unrepentant” or “nervous” optimists. Only 17%, alas, are pessimist, whether “hopeful” or “curmudgeon” (see below). Did their parents short them on lollipops?

Whatever the reason, it is clear that the overwhelming consensus is for a recovery within months. Great news, right?

But what is our track record to date? Recall, faithful reader, the humble results of a couple of recent surveys forecasting future oil price. One survey ran on DrillingContractor.org on 1 April 2008. The second appeared on 21 October 2008, when the handwriting of doom was emerging on the wall, downward spiral-wise. You can see the stark contrast in the bottom figure.

We are today at that moment of time we sought to predict. So who picked the right door?

Unfortunately, in both oil price surveys, the on-target forecasts lie squarely in the Curmudgeon Zone – not only in October 2008, but even six months earlier, in starry-eyed April.

I am a child of the constant curmudgeon (sorry, Dad). I respect that perspective. But I refuse to repent on optimism. So call me a curmudgeon.
Thanks to DC Assistant Managing Editor Linda Hsieh for conceiving this survey.

You can reach Mike Killalea at mike.killalea@iadc.org.