Patterson-UTI Says The Talent Drain In Drilling Will Be The Biggest Recovery Challenge

[thackney]

Patterson-UTI Says The Talent Drain In Drilling Will Be The Biggest Recovery Challenge
http://oilpro.com/post/24135/patterson-uti-says-the-talent-drain-in-drilling-will-be-the-biggest-recovery-challenge

During the downturn in the onshore drilling business, much of the focus has been on all the idle iron. Almost 1,500 US land rigs have been stacked, and many observers are focused on the state of these rigs and their ability to come back should operators look to ramp up activity in shale in a year or two.

On Patterson-UTI's conference call last week, the company said it has been carefully stacking equipment leaving it well positioned to reactivate iron when it is needed again. The company's bigger concern is human capital and recovering from the industry-wide talent drain.

"We expect that across the industry, the biggest challenge to reactivating equipment will be associated with recruiting, hiring, and training new employees," CEO Andy Hendricks said last week. "While labor may initially be easy to find, given the magnitude of the workforce reduction in the industry, we expect it will be very challenging for the industry to meaningfully increase the number of personnel quickly, given the magnitude and duration of the downturn."

With oil prices pushing back up into the mid-$40s and rig count declines stabilizing, this challenge may emerge sooner than some expect. Back in 2015 when oil prices rallied into the low-$60s, Patterson began fielding incoming calls from operators looking to increase activity.

We aren't expecting any meaningful increase in rig count during 2016, but should an oil price rally allow for growth in 2017 or 2018, the lack of available talent may slow the recovery trajectory. The industry's wholesale downsizing to protect margins has impaired the workforce, scattered talented hands, and damaged the industry's credibility as an employer. Companies may have to throw a lot of money at workers to get them to return in an upcycle, and competition for good hands will be stiff.

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More info with charts and graphs at the source:

[Bigun]

Patterson is entirely right!

The iron just does what it's told and thus needs people who know what to tell it!  They will be difficult to find if this downturn doesn't end real soon!

[montanajoe]

Boom and Bust the story of the oil patch, the people will be there just like they always have.

BTW thackney its great to see your posts again always insightful and on point..Bravo

[thackney]

Boom and Bust the story of the oil patch, the people will be there just like they always have.

The point in this article, deep and long lasting busts result in a much greater lag in companies being able to respond to the coming boom.

Which means for the consumer, the longer and lower oil/gasoline prices are now, the high the coming spike in oil/gasoline prices is likely going to be.

They will hire enough people, eventually, and for even higher rates, to lure them back from more stable industries.

[IsailedawayfromFR]

The point in this article, deep and long lasting busts result in a much greater lag in companies being able to respond to the coming boom.

Which means for the consumer, the longer and lower oil/gasoline prices are now, the high the coming spike in oil/gasoline prices is likely going to be.

They will hire enough people, eventually, and for even higher rates, to lure them back from more stable industries.

The companies are doing what they can to be ready once activity picks up.  One example I know first hand is that instead of just laying off people, companies are cutting their hours to keep a thread attached to their better talent. 

I have a nephew at Nabors who is working only 20 hours a week, and a friend working for a mud-company working only 2-3 days per week.

And when the return fires back up, many of those who were not seasoned and lost their jobs will no longer be available to return to the industry as they have moved on, so some of the old-timers like me might be called on the pitch in.(Although I like my retirement much).