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McDermott International Inc. Message Board

  • a_76_oil_man a_76_oil_man Nov 12, 2008 3:14 PM Flag

    Long term nature

    Oil prices are not going to stop oil field infrastructure build-out, because the oil companys (State owned or Puplic owned) base capital projects on long-term estimates of the price of crude, not short term price swings. There will be plenty of new business booked on the Oil & Gas side. So as in past cycles, a rapid drop in projects is unlikely to occur, because projects are taken under the assumption that $40 or $60 crude will be realized on average. As the commodity prices slide, costs for steel and other product will decrease, making the projects ROI and NPV better, therefore the Chevrons/Exxons will try to lock up those prices to bring the next fields on-line. It takes 3 to 7 years to bring on a new field - you just can't stop/start these type of projects. (for example - the project I am currently working on is around 7 billon dollars and first oil is scheduled for 2012)

4.52+0.07(+1.57%)Nov 25 4:04 PMEST