President Trump recently signed an executive order on energy policy entitled Unleashing American Energy. This order sets out to encourage energy exploration and production on Federal lands and waters including on the Outer Continental Shelf as well as ensure all regulatory requirements related to energy are grounded in clearly applicable law. As the President has repeatedly said, he wants oil companies to “drill, baby, drill.” However, it is not yet clear if this will result in any meaningful increase in offshore oil and gas activity.
Today’s trend among major energy companies has been to return value to shareholders through dividends and share buybacks. To do so, they must generate positive cash flow, however, the current range of oil prices is too cheap to justify significant drilling activity. Instead, it is likely that the improved regulatory environment will result in increased margins at the current oil prices resulting in a focus to improve production from already developed fields. However, should the offshore market remain at current activity levels, it is still a favorable environment for vessel owners. Some vessels are also returning to the US Gulf due to the pause in new wind farm projects mandated by President Trump by another executive order.
I continue to remain very optimistic in the longevity of the offshore oil and gas market.