MIDLAND, Texas (Big 2/ Fox 24) – Oil drilling continues in the Basin. But moving it out may be causing a slowdown in the industry.
Apache Corp. reported it lost $360 million during the second quarter. The company says the slow down is because of low prices and pipeline shortages.
Financial expert, Mickey Cargile of Cargile Investment Management, breaks it down on what could this mean for the Permian Basin:
“A year ago the oil prices were higher than they are today,” Cargile says.
“Well Apache has been very active in our area,” Cargile says. ” They were hurt compare to a year ago because oil prices are about 8% lower and natural gas prices are about 43% lower. They’re selling more products but they’re just getting lower prices for it.”
What can it mean for the oil business?
“The cost of doing business in the Permian continues to increase,” the expert says. “This combines to hurt their performance but they produce more oil out of the Permian than they did in the same quarter a year ago and that’s good news for us it shows they’re very active in the Permian.”
Why does the company say it’s a slowdown in the industry?
“Investors were looking at it from the standpoint the earnings were down compared to a year ago,” he says. “They reported a 50 cent per share earning this year and they reported 11 cents per share earning so that decline is what investors are looking at.”
Would this affect everyone in the Basin?
“Well our economy is driven by the number of drilling rigs in the area,” Cargile says. “If that were to slowdown substantially then obviously you’ll see some people out of work, but we haven’t seen that and I don’t really expect we really will see it unless you just have a long term decrease in the price of crude.”