It’s odd that one of if not the worst performing sector in the market this year is oil and gas service and drilling companies. Take a look at HAL, SPN, SLB, WFT, BAS, and more. They are all weak performers. Yet look at the price of oil near record levels. So what’s the disconnect? It’s the fear of dramatic drops in production of natural gas in the U.S. No question that has already started. Hal and BAS have both said as much in conference calls and regulatory filings. But they have all also said they expect overall revenues and utilization to be strong based on the high prices for oil and oily gas and the shift toward exploration of them. Judging by their stock prices, the Street doesn’t believe it. No one though is talking about the potential for these companies just to pack up hardware and people and move to China where natural gas shale deposits may be as great as the U.S. That’s why I thought this recent article from the Financial Times was interesting.
China sets target for shale gas development by By Leslie Hook in Beijing
China has released its first five-year plan for the development of shale gas, setting ambitious production targets and emphasising the need for foreign co-operation and better technology in developing the sector.
via China sets target for shale gas development – FT.com.