Investment Committee Weekly Talking Points


Over the past couple of months, many of our commentaries have centered on the oil industry. Rather than have statistical or graphical data, we will focus on the earnings calls from some of the major players in crude: Halliburton and Core Laboratories. These companies have seen the impact in the fall of oil first hand, but the CEOs of these companies seem to understand the short and long term needs for a global audience. According to Halliburton’s CEO, David Lesar, “Today our customers are thinking about growing their business again rather than being focused on survival. (Call)” This is the sentiment shared by other leaders in the oil industry who have experienced the decline.

Another expectation shared by CEOs is depressed capital expenditures for a couple of years. The balance sheets of these large organizations could sustain a substantial drawdown in oil, but they are now carrying significant amounts of debt obligations to stay afloat. “Balance sheet repair is still critical and many customers are looking at severe declines in production as many of them have drilled few wells in the last 18 months,” said David Lesar. “And while there are many customers that have adequate liquidity, there is also a large segment evaluating how to access capital.” This sentiment is also shared by Core Laboratories CEO David M. Demshur: