The oil bust is taking its toll on the Eagle Ford.
Since June 2014, crude oil prices that have plunged from over $100 down to new lows of under $43. The U.S hasn’t seen these types of prices in almost seven years and the effects of the prolonged pricing is being seen, especially in the small towns of the Eagle Ford.
Related: Summary of the Oil Bust
Hydraulic fracturing literally changed the landscape of many rural areas in the Eagle Ford. As the surge in oil production it unleashed a whirlwind of growth, construction and population explosions. But as the low oil prices hang around, the bankruptcies, mergers and layoffs are affecting these towns the most.
“Everybody is waiting for doomsday. Everything was good, and everybody was getting these big checks, and everybody waited for their land to be leased, and then it all came to a screeching halt around the beginning of the year.”
Producers have been forced to tighten their budgets and change their strategies in order to stay competitive. And while these tactics have worked for some, the prolonged low prices are forcing many to resort to extreme measures to save their bottom line.
Related: Fierce Competition in the Eagle Ford
In a recent study of 66 companies, the IHS found that in the first quarter of the year alone they had to write down nearly $29 billion in the value of their assets, which exceeded the total for the full year of 2014. These measures by big producers are squeezing out many local service companies who are being forced to drastically reduce their prices and fees, causing a ripple effect that negatively impacts all parts of small local economies.
The future is unclear and uncertainty and predictions of doom are now commonplace. Some analysts forecasted possible economic ruin for oil-dependent states and others warned of the crippling of the industry. But many seasoned oilmen saw the downturn as a wake up call of sorts and an opportunity for producers to take a hard look at their systems, processes, personnel, technology and strategies outside of the frenetic pace the boom required.