Oil Bust Brings Opportunities

Oil Bust Brings Opportunity
Oil Bust Brings Opportunity

With the free fall of oil prices in 2014, producers are scrambling to get their bearings and stabilize their plans while awaiting the recovery. Intuitively, a downturn doesn't feel like a positive thing, but  for those willing to look a little closer, it's not all doom and gloom.

In other areas of life, times of struggle often produces important changes that strengthen a person or organization and solidify solutions for a healthier future. This is the posture being taken by many industry leaders during the current oil bust. Even though the decisions can be tough, many understand that a downtime can also hold opportunities.

Recently at the NAPE Business Conference in Houston, several speakers added to the optimistic refrain as they talked about these opportunities. Most prevalent was the opinion that the current squeeze forces companies and individuals to become more efficient. In the middle of a boom, things are going ninety miles an hour and things can be taken for granted. A downturn allows some time, space and energy to focus on fundamentals.

This is a wake up call, of sorts, for producers to take a hard look at their systems, processes, personnel, technology and strategies outside of the frenetic pace they were in a year ago. “When you’ve been chasing wells fast and hard, this downturn gives you a chance to develop”, said Gary Evans (Chairman/CEO, Magnum Hunter). Leaders anticipate that smart producers will develop new technological advances and become leaner and stronger over the coming months.

Kurt McCaslin, (VP Operations, Anadarko) added, “All those people who were chasing rigs have been redeployed to chase costs and inefficiencies. There was an initial culture shock, but this has turned into mining the opportunity, not only for improving the company, but also for workers to strengthen their own skill base.

Certainly there will be operators that succumb to the current oil bust and don’t make it. So, what will distinguish the winners from the losers? This panel’s consensus was that it’s all about relationships, reputation and execution.

During a recent analyst meeting, Rex Tillerson - Chairman and CEO of ExxonMobil led a discussion that included his company’s strategies as they face the current pricing instabilities.

Tillerson commented that, “Yeah, it provides us a whole lot of different kinds of opportunities, not just in terms of accessing new resources through various means. But getting the cost structure back to where we believe it’s more appropriate. So, yeah this provides us a whole host of opportunities to strengthen our underlying fundamental business and be well positioned than for whatever happens in the future.

photo credit: Gerd Altmann CC0

NAPE Business Conference 2015

Bob Fryland NAPE 2015
Bob Fryland NAPE 2015

Hundreds gathered in Houston today for the opening of the NAPE Summit Business Conference. This annual networking event is designed to bring prospects, producers and purchasers together to forge important business connections and mine opportunities.

Related: Winter NAPE Expo Business Conference Highlights – 2014

In an industry riddled with recent uncertainty, the atmosphere at the conference was marked by optimism. Bob Fryklund, Chief Upstream Strategist for IHS, set the tone in his opening comments as he encouraged participants not to push the panic button too quickly. Though he acknowledged the conversation has changed in recent months, he reminded participants of the record production set by North American producers in the last five years.

Fryklund commented, “OPEC and others discount the resilience of North America,” and added that, “we will not be a diminished producer because of what we are going through.

Many of the speakers spent part of their time talking about record production set by North American producers over the years and cyclical nature of the industry. History showed we would weather this storm.

Jack Stark, President and COO of Continental Resources continued the theme by listing some of the industry wins including:

  • Unprecedented growth from 2005-2015
  • World changing upstream technologies
  • Discovering a whole new, vast class of reservoir (shale plays)
  • Reserves at all time highs
  • Created jobs and increased our energy independence
  • Improved efficiencies such as cutting drilling time from 45 days to 17
  • A midstream evolution: pipelines, rail, rail to barge and connections to all coasts

For more about NAPE, visit napexpo.com

Winter NAPE Expo Business Conference Highlights - 2014


The NAPE Expo is a North American event with some international influence, which features key players in the oil and gas industry. The business conference theme for 2014 was sustainability in the U.S. oil and gas industry.

The conference touched on key issues such as hydraulic fracking, sustainable business strategies and technological innovations.

Multiple speakers  put a spotlight on the practice of hydraulic fracturing. Here are some of their comments:

  • Former Secretary of the Interior, Ken Salazar, said, "I believe hydraulic fracking is safe... there is not a single case where fracking has caused an environmental problem for anyone."
  • David Blackmon, Dir. FTI Consulting, said, "the biggest issue by far facing the industry today is water."
  • "Treatment and recycling will be one of the main drivers moving the industry forward over the next 10 years," said Andrew Slaughter, VP, Upstream Research, IHS

The Business of Unconventional Drilling and Technology

  • Robert Turnham, CEO, Goodrich Petroleum on business strategy: "we move early, identify opportunities and take the risk up-front. If you move early, then you enjoy lower royalty burdens straight off the top."
  • Industry targeting the "sweet spots" in the shale plays. Floyd Wilson, CEO, Halcon Resources, on the Bakken: "[the company's] most recent wells in the Bakken are the best ever."
  • Apache converting waste gas to electricity for field grid usage
  • General industry focus on artificial lift technology in shale drilling to quickly drain reservoirs
  • New diverter technology being utilized to make marginally economic wells profitable

Other Highlights from the Conference

  • Luke Keller, VP, BP America, said, "[the] U.S. could achieve energy independence by 2035."
  • "$2000 financial benefit to every American household by 2015 due to unconventional drilling of natural gas," according to Don McClure, VP, Government Stakeholder Relations and Legal, EnCana Oil and Gas USA
  • "Tremendous amount of light sweet crude is about to be discovered and put into the marketplace [in the U.S.]" according to Charles McConnell, Rice University
  • Industry encouraged to support better outreach and education initiatives via social media outlets

Learn more about NAPE by visiting napeexpo.com

Notes From Winter NAPE 2013

Geologist Wanted Ad
Geologist Wanted Ad

We spent Winter NAPE (February 6-8 in Houston) listening to the pros discussing their views on energy policy, fundamentals, and investments. The event is centered on North American, but international influence seems to grow each year. A few photos are included below the post. Highlights from the business conference include:

  • At one point in 2012, there were 12-13 federal agencies overseeing some point of the E&P business
  • Alaska is working to create incentives to fuel future exploration. (Only 500 exploration wells have ever been drilled in Alaska. More than 250,000 have been drilled in Texas)
  • Alaska is working to ensure the federal government can't block development the state is in favor of
  • Most of those that oppose "Fracking" oppose oil & gas development in general
  • The industry moving to address all stakeholders. (Not just mineral owners and shareholders)
  • Asia and the US are set to lead global growth in 2013
  • Payroll tax hike will reduce growth, but we should still grow
  • Chemical facilities are expanding for the first time in 50 years ($95 billion in investment planned)
  • Problems in the US are artificial (man made)
  • Brent is expected to trend into the low $80s, with WTI differentials shrinking
  • A Whiting executive believes the Bakken-Three Forks could hold 25-50 billion barrels of recoverable oil
  • Anadarko is 500 wells into the Eagle Ford and still sees upside (targeting a 4.2 day drilling time)
  • Schlumberger shared a study showing 30% of perf clusters don't contribute to production

In previous years, the floor of NAPE has had a general theme. One year it would be the Barnett, the next the Haynesville, then the Bakken. This year there wasn't a single area that seemed to dominate the booths. There were small deals across almost all of the shale plays. I saw several Bakken and Eagle Ford deals, as well as conventional projects around the country. From speaking with the attendees, it sounds like conventional drilling has become unconventional in today's market. The largest operators are investing in big, repeatable shale plays.

The North American Prospects Expo (NAPE) is one of the largest oil and gas gatherings in the wold. E&P companies from across the world come to Houston to showcase the next big oil deal.