“The consulting firm estimates that supply chain savings through squeezing the service sector will result in an average cost reduction of just 10%-15%, half what the industry is hoping to achieve, and the sector must rethink the way it approaches projects, many of which were already expensive when oil was at $100/bbl,” according to Seeking Alpha.
Lower oil prices are pressuring exploration and production stocks as the drillers’ value is based on production and assets already sunk into projects. [Energy ETF Investors Grow Wary of Oil Outlook]
Additionally, these energy companies require a lot of capital to keep drilling, and since depletion rates on wells are high, the companies will require cheap capital to keep operations running.
Energy Select Sector SPDR
