With gas prices approaching the lowest prices seen in the 21st century, economists are wondering how this will affect the booming oil towns in the Dakotas and Texas. While consumers are ecstatic, developers and companies that support development in the oilfields have reason to be worrisome.
On the heels of a recent 10,000 man layoff in North Dakota, CNN Money reports that there could be as many as another 20,000 layoffs by June. Additionally, in North Dakota alone, the number of rigs drilling new oil wells dropped from 187 this time last year to 161 this week — the lowest level in five years.
Certainly this slowdown affects the drillers, but there is an anticipated trickle down affect that will create less work for thousands of ancillary service providers.
These numbers create an air of uncertainty, which makes banks and even some invoice factoring companies disqualify many successful oil service providers in the industry or region for financing.
“Where does this leave companies who are still working at full capacity and have extended billing terms with the big oil companies and developers?” asks Universal Funding President, Kyle Bergstedt. “Fortunately, they can still count on fast invoice factoring approval and invoice processing with Universal Funding.”
“Cash flow is a top concern for service providers in the Bakken North Dakota region since most of the services provided have payment terms extending beyond 30 days. Our invoice factoring program creates cash flow so that a business can remain productive and can even grow in these uncertain times,” expresses Bergstedt.
Oilfield and finance eyes are closely watching what happens with the Keystone Pipeline decision in the next coming month. Just this week the decision was inconclusive in the Senate as not all representatives were able to vote due to the snowstorm out east.