Changing crude oil consumption habits and shale gas weigh on O&G

On the uptrend: Higher production from shale suggests that these companies have managed to bring down their cost of production to a point where it is profitable for them to start exploration and production even when oil is at US50 a barrel or less. – Bloomberg

A DAY after UMW Oil & Gas Corp Bhd (UMW-OG) announced it had won contracts for two of its rigs and expressed optimism that the company’s seven rigs would be fully utilised by the second half of the year, the stock was unchanged at 62 sen a share, which is near its all-time low, in trading yesterday.

The caveat to its announcement of full utilisation of its rigs was that its earnings would remain under pressure for some time. This scenario of which a company has its assets fully employed, but not for long, and warns of its earnings goes to show just how tough things are in the oil and gas (O&G) sector today.