Will Market Conditions Sideline Devon Tower?

[soonerguru]

I haven't seen this discussed here, so if it has been, please accept my apology (for all of the etiquette trolls).

What we were told is that Devon will be roughly doubling the size of its workforce in the next few years, and the additional square footage would be needed to sustain current (as of August) growth projections.

Seriously, with the price of energy tanking and the global industrial economy slowing to a crawl, does anyone believe Devon will be doubling its workforce in the near term?

[metro]

http://www.okctalk.com/okc-metro-are...-tower-26.html

Here's a good article talking about how Devon's plans are still on track.

http://newsok.com/devon-to-keep-work...rticle/3311044

[OUGrad05]

I would guess that for Devon to really sideline the project Oil is going to have to drop below 40 and nat gas into the low 4's or upper 3s.

[Steve]

Gas prices are higher than they were when Devon first began exploring this project.

[OUGrad05]

Gas prices are higher than they were when Devon first began exploring this project.

The cost of production has skyrocketed the last 6 years. What used to cost 15 bucks to get out of the ground now cost 30.

[betts]

On the other hand, if gas prices stay lower, building materials will be cheaper. If the economy isn't great, labor costs will be lower.

[adaniel]

You realize that even with oil closing below $70 today, its still about what it was during the late summer and early fall of 2007, which by most measures were still good times in the oil and gas industry.

Its good to be concerned but I think some of you guys are paranoid. Oil and natural gas prices usually bottom out during autumn months.

FWIW, I was a bit surprised to hear Mick Cornett say that oil has to be at least $85 a barrel or OKC is somehow in trouble. I think he was a little off base. I don't know anyone in the industry who thought oil was properly priced at $90 or $100+ a barrel.

[Insider]

Devon sent out a letter to employees on Tuesday. They stated that they will be proceeding as planned with the new building. They have been doing surveys amoung the employees of what businesses they would like to see in the new building. Basically, the market has no impact on Devon as they are a very financially strong company and are VERY smart with their money.

[OKCMallen]

The cost of production has skyrocketed the last 6 years. What used to cost 15 bucks to get out of the ground now cost 30.

They'll go back down with lower petro prices and interest rates.

[soonerguru]

Great news on the Devon front. They are a very well-run company.

[okcpulse]

Guys, guys, chillax! This is not your daddy's oil bust. Oil demand continues to rise, and unlike 1985, stock analysts now know that oil is a finite resource. The days of $20/bbl oil are over.

[OUGrad05]

You realize that even with oil closing below $70 today, its still about what it was during the late summer and early fall of 2007, which by most measures were still good times in the oil and gas industry.

Its good to be concerned but I think some of you guys are paranoid. Oil and natural gas prices usually bottom out during autumn months.

FWIW, I was a bit surprised to hear Mick Cornett say that oil has to be at least $85 a barrel or OKC is somehow in trouble. I think he was a little off base. I don't know anyone in the industry who thought oil was properly priced at $90 or $100+ a barrel.

You're right, most of us didn't think it was priced right but the corresponding massive spike in costs has really hurt a lot of companies in the industry with prices coming down. Tubular goods alone have gone up 6 fold since this time in 2004 and are up 2.5 times since this time last year.