With the recent collapse in oil prices, it is now clear that 2019 will not be as strong of a year in the U.S. oilfield as was expected even one month ago. This quarter’s drop in prices came squarely during E&P budget season, giving some U.S. operators second thoughts about their 2019 capex plans. Put simply, E&P cash flows available for drilling at $75/bbl WTI oil prices are MUCH, MUCH higher that at $50/bbl. Since we see oil prices remaining challenged in early 2019, our forecast for 2019 E&P cash flows, capital spending and oilfield drilling and completion expectations have been reduced. More specifically, we are now assuming the following: 1) U.S. E&P cash flows will decline by ~7% y/y at current $53 WTI “strip” prices; 2) U.S. E&P initial budgets will likely decline by ~10% y/y in 2019; 3) the U.S. rig count will decline from peak to trough by 7-10% in 1H19; 4) U.S. completion activity will relatively outperform drilling activity; and 5) oilfield service pricing will generally be under pressure through 1H19.