When oil hit $55 per barrel in late 2025, the drilling and completions side of the industry surrendered. A few months later, war breaks out in Iran, and WTI climbs past $100. That’s a marker at which meaningful drilling should occur. Yet, that’s not what I’m hearing. Rising oil prices are all over the press and inside politics, but they’re not in the conversations I’m having with E&Ps and the service side.
On Day Nine of “Epic Fury,” I was talking with a chemical supplier (I am the owner of a frac company in Appalachia and an E&P in the Powder), and the war never came up. Nor did it with another operator I was talking to, nor with our frac-side operations manager, our drill-side ops manager, our CFO, controller, landman, or our office manager. No one—that I know—is carrying on much about the recent jump in prices, let alone cheering them on. Outside of thinking we’d better hedge, the response has mostly been a few words, a few shrugs, a “let’s take it while we can,” attitude. Our collective reaction would surprise outsiders, but it seems normal to me. A muted response seems rational, even grounded, after years of enduring the whipsaw of ups and downs. It’s also normal to assume that when the war comes to an end, we will be left with a supply and demand picture that may have changed somewhat due to oil installation attacks, but maybe not enough to be supportive of a renewed push to pick up rigs that were just laid down.
Geopolitical risk is as common to drilling as is the risk of dry holes and mechanical failures. War premiums matter, for sure, but not enough to build a developmental program on. In April 2020, we got through the pandemic and an abysmal frac market, plus a storage crisis when WTI hit negative $37 per barrel. Two years later, in March 2022, oil hit a decade high of $130 when Russia invaded Ukraine. Over the next nine months, North America added 100 rigs until early 2023, when the count rolled over in a downhill trend that has yet to be broken.
Dan Doyle is the author of “Of Roughnecks & Riches: A Startup in the Great American Fracking Boom,” a firsthand account of building a company during America’s shale revolution.
Maybe if oil were touching $120, there’d be more chatter. Or more importantly, if oil were to linger in the high $70’s for months on end, we’d see it, but with empty frac schedules and stacked rigs, it’s going to take something constructive, something along the lines of certainty. The quick bucks from war will dissipate, and everyone knows it. I wouldn’t be surprised either if the Trump Administration were to cap prices, like the old days of oil and airline ticket prices.
So far, nothing has changed for us. There’s been no uptick in RFPs, nor are operators calling and asking for room on our frac schedule. It’s because even missile strikes aren’t shaking off the lethargy in oil right now. It gets like that on our service side when there’s little activity. You wait and see. You don’t burn calories. Maybe later, but not now.
My view is that two catalysts need to occur before the phone really starts ringing. One is a change in the supply-demand balance, and the second is a prolonged war, with the inevitability being that they are one and the same. That is, the only thing right now that will change the supply-demand balance is a prolonged war. But that would take time, and my guess is there won’t be much mid-term voter stomach to see a bombing campaign carry on…and on.
The extra dollars flowing in after nine days of war may just go to the completion of a few DUCs. Maybe, but the more likely outcome will be distributions to stakeholders rather than service companies. Capital providers likely aren’t going to free up allocations any time soon. The forward-looking price strip hasn’t adjusted much either.
Like many others looking for something better, I attended NAPE this year, a kind of walking marketplace where money meets prospects. My E&P company didn’t set up a booth, but a lot of friends hocking deals did. What to me was glaringly obvious was the haves-and-haves-not undercurrent among the attendees. Prospect holders were the homely kids at a high school dance—relinquished to the dusty corners of the gym. The cool kids were the ones with the money, the PE firms with those big booths stuffed full of couches and padded chairs, alongside banks, packagers, brokers, and private capital providers. And then there were those talking about family office connections, the unicorns I’m constantly hearing about, but never seeing. I’m sure deals were being made, or will be made, based on introductions and planned meetings, but what I was hearing in terms of deal structure was the Golden Rule. He or she with the gold rules. If oil were sustained at $90, the script would flip, and prospect holders would be the ones with the couches, chairs, and coffee bars. But for now, they’re not. Even with escalating oil prices, the shorts will be waiting for the last missile to drop and will immediately cut the legs out from underneath us when it does. Unless durable supply comes off through damaged oil facilities or sabotage—like the Kuwaiti oil fires set by fleeing Iraqis in the 1991 Gulf War—the market will once again find its way to pricing the marginal barrel, last said to be in the $50’s. But hopefully not. That’s too low, too much of an accelerant for the oscillating sine curve of ups and downs. It’s nothing to build a company on. The same can be said of oil in the $90’s. It’s too high. For that reason, and the Golden Rule, E&Ps will remain cautious and service companies will suffer—until market forces eat away surplus barrels on demand, and not war.
By Dan Doyle – find Dan on X: @dandoyleoil
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