DrillingInfo / Allen Gilmer : Eagle Ford Shale Takeaways: 5 Reasons You Must Become an Exceptional Shale Oil Operator

<div class="entry" style="margin: 0px; padding: 0px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeesaUbrJN_jRzMqlWi10h8usiwg2tDOdeaAyI9gZ2NRBp8UJkuzRk_XmHmg_lTygckdJurER_Sxrfe3hsyhAxycCAq_0jMnd1s7565a8PAj22KU5yx13vrgDrgjLB9MeQidnh8KS-xThW/s1600/Putin.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><br /><br /><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeesaUbrJN_jRzMqlWi10h8usiwg2tDOdeaAyI9gZ2NRBp8UJkuzRk_XmHmg_lTygckdJurER_Sxrfe3hsyhAxycCAq_0jMnd1s7565a8PAj22KU5yx13vrgDrgjLB9MeQidnh8KS-xThW/s1600/Putin.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: start;"><span style="color: #003366; font-family: Helvetica Neue, Helvetica, sans-serif;"><span style="font-size: 22px; line-height: 22px;"><br /></span></span></div><div class="pf-content" style="background-color: white; color: #333333; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-size: 14px; line-height: 19.59375px; margin: 0px; padding: 0px;">Many look to the Eagle Ford Shale as a phenomenal example of US oil and gas companies doing exceptional things. But not everyone shares our enthusiasm.<br /><div style="margin-bottom: 20px;"></div><div style="margin-bottom: 20px;"><a href="http://wapo.st/1gHajQZ" style="-webkit-transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease; color: #ff6600; outline: none; text-decoration: none; transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease;">Vladimir Putin recently said,</a> “It is extremely dangerous to encourage people to see themselves as exceptional, whatever the motivation.”</div><div style="margin-bottom: 20px;">Apparently, he thinks the world would be better off if we all saw ourselves as hopeless lackeys.</div><div style="margin-bottom: 20px;">However, there is a certain amount of delicious irony in this statement,<strong>because the reality is that the whole story of the US unconventional oil and gas industry is about American Exceptionalism.</strong></div><div style="margin-bottom: 20px;">It’s about those operators in our industry that aren’t afraid to push the envelope. The operators that understand the risks AND rewards, and challenge the status quo with regards to what is and is not possible.</div><h2 style="color: #003366; font-size: 22px; font-weight: normal; line-height: 22px; margin: 0px 0px 10px; padding: 0px 0px 15px;">Not all Operators are Created Equal</h2><div style="margin-bottom: 20px;">We recently examined several thousand wells and extracted a variety of geological and petrophysical parameters to build a geological model across the Eagle Ford play to replicate the methods we employed in the Barnett and the Bakken. We then analyzed the over 7,000 wells that are producing today to reference against these to find out what things that are actually driving results in these shale plays.</div><div style="margin-bottom: 20px;"><strong>What we found in EACH PLAY is there really is no such thing as established “best practices” in unconventional oil and gas. There is only what we know today, and everything gets to be challenged.</strong></div><div style="margin-bottom: 20px;">There are a handful of operators that are starting to challenge what the others are doing and thinking. These operators demonstrate that in unconventional oil and gas, these shale reservoirs are not the same beasts for everyone. <strong>There are companies that do it more right, and there are companies that are doing it more wrong.</strong></div><div style="margin-bottom: 20px;">Not surprisingly, the companies doing it right are booking large reserves and seeing exceptional returns – both in terms of new production and new investments into the company. So a great divide exists between those operators that are willing to invest in the knowledge, <a href="http://bit.ly/17PjDBJ" style="-webkit-transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease; color: #ff6600; outline: none; text-decoration: none; transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease;">analytics</a> and technology you need to be successful in plays like the Eagle Ford Shale, and those operators that are crossing their fingers hoping for the best.</div><div style="margin-bottom: 20px;"><strong>If you are in the latter group, I present to you 5 reasons that show beyond a shadow of a doubt to thrive in the 21st Century oil and gas industry, you absolutely must become an exceptional shale oil operator.</strong></div><h2 style="color: #003366; font-size: 22px; font-weight: normal; line-height: 22px; margin: 0px 0px 10px; padding: 0px 0px 15px;">Lessons from the Eagle Ford Shale: 5 Reasons You Must Become an Exceptional Unconventional Operator</h2><div style="margin-bottom: 20px;"><strong>1. Accelerated Production:</strong> <strong>The very best Eagle Ford Shale operators produce 30% to 40% better than the median FOR THE SAME QUALITY OF ROCK, and they produce 3 times as much as operators at the low end.</strong> Companies like EOG, Marathon and Freeport can work the same rock, with basically the same equipment and get 3x the production. What would it do to your stock price or the amount of investors willing to partner with you on your next operation if you could go out there and say you produce as much as 3 times as the rest of the industry drilling the exact same rock?</div><div style="margin-bottom: 20px;"><strong>2. Access to Prime Acreage:</strong> The implications for mineral owners in this scenario are obvious. Massive gaps in production naturally lead to large gaps in royalty payments. <strong>A 25% royalty lease with an average operator is the equivalent to an 18% royalty lease with the best operators. That same lease with the worst operators is the same as an 8% lease with the best.</strong> As a mineral owner, when was the last time you gave an 8% lease? If it was recently, call me. Lets do some bidness! As an operator, are you taking advantage of your abilities to get the better leases?</div><div style="margin-bottom: 20px;"><strong>3. Opportunity Cost:</strong> Based on current numbers, we anticipate the Eagle Ford Shale will reach a maximum rate of production in as early as 2022. Production will flatten out until about 2028-2029 and then start to drop. Looking at the baseline production forecast in grade A to G acreage, there are up to 85,000 wells left to be drilled. If you take it down to H-grade acreage – which the best operators will eventually be able to go out and produce – <strong>you’re looking at as many as 100,000 wells left to drill in the Eagle Ford Shale.</strong> How much money are you leaving on the table if you don’t go out and get your biggest share of that 100,000?</div><div style="margin-bottom: 20px;"><strong>4. Lower Break Even Cost:</strong> As I alluded to in the last point, our <a href="http://info.drillinginfo.com/products/di-analytics/" style="-webkit-transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease; color: #ff6600; outline: none; text-decoration: none; transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease;" target="_blank">DI Analytics team</a> has graded the produceability of the Eagle Ford Shale and graded the acreage from A through J grades. What’s fascinating is at G-grade, the average operator needs oil prices at $101 to break even. However, the best operators can break even when prices are as low as $60 in this same grade of acreage! You see this same ratio all the way up into the best acreage. Naturally, this means if you’re not a very good operator, you have to have really fantastic acreage to turn a profit. <strong>But if you’re an incredible operator, there’s a whole lot of opportunity for you to pick up acreage belonging to worse operators for what is essentially the proven producing value.</strong> Which side of the equation would you rather be on?</div><div style="margin-bottom: 20px;"><strong>5. Service Companies Can’t Save You:</strong> There is a rule of thumb in the oil and gas industry that says oilfield service companies provide a wonderful method of technology transfer. In other words, you don’t really need to know how to do the work because you can get company A, B or C to go tell you how it’s done. After all, they do everybody else’s wells so they can just tell you the secret sauce, right? <strong>But the data shows that’s simply not true.</strong> As essential as they are to the industry, oilfield service companies are not involved in enough pieces of the puzzle to effectively take or even recognize best practices and successfully apply them across the board. How much money to you stand to lose by counting on service companies to save your GG&E team?</div><h2 style="color: #003366; font-size: 22px; font-weight: normal; line-height: 22px; margin: 0px 0px 10px; padding: 0px 0px 15px;">To the Victor Go the Spoils</h2><div style="margin-bottom: 20px;">What this all boils down to is it’s those companies that are willing to roll up their sleeves, do the work and make the investments necessary to master these plays that are seeing extraordinary returns. And these same companies stand to continue making gains well into the future.</div><div style="margin-bottom: 20px;"><strong>Operators like EOG, Marathon and Freeport may seem like the minority today because they are part of the small handful of people that “get it”. But it won’t take long before they begin to sweep up and produce the massive amounts of acreage that will be left behind by those that have not made the necessary effort to be good at unconventional drilling.</strong></div><div style="margin-bottom: 20px;">After the dust settles in the South Texas oilpatch, we will see it was the true unconventional innovators that were the majority all along … because these will be the operators that are left standing. These survivors will be the ones left happily maximizing production and returns from acreage so many others gave up on long ago.</div><div style="margin-bottom: 20px;"><strong>Thomas Jefferson once said, “One man with courage is a majority.”</strong></div><div style="margin-bottom: 20px;"><strong>Again, which side of the equation do you want to be on?</strong></div><h2 style="color: #003366; font-size: 22px; font-weight: normal; line-height: 22px; margin: 0px 0px 10px; padding: 0px 0px 15px;">Your Turn</h2><div style="margin-bottom: 20px;">What do you think? How much of a time horizon do we have left in the Eagle Ford Shale? And which operators will ultimately win out? Leave your thoughts in the comment below. If you want to learn more about Drillinginfo’s Analytics Subscriptions or how to bring this in-house at your shop, please email Bob Black at bblack [at] drillinginfo [dot] com.<strong>And if you want the slide deck from my DUG Eagle Ford 2013 presentation that created this post, enter you information below and click “Give It To Me!”</strong></div><div style="margin-bottom: 20px;"></div></div><div class="ts-fab-wrapper" id="ts-fab-below" style="background-color: white; clear: both; color: #333333; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-size: 14px; line-height: 19.59375px; margin: 2em 0px; padding: 0px;"><span class="screen-reader-text" style="clip: rect(1px 1px 1px 1px); left: -9999px; position: absolute !important;">The following two tabs change content below.</span><br /><div class="ts-fab-tabs" style="margin: 0px; padding: 0px;"><div class="ts-fab-tab" id="ts-fab-bio-below" style="border: 2px solid rgb(51, 51, 51); margin: 0px; min-height: 80px; overflow: hidden; padding: 12px;"><div class="ts-fab-avatar" style="float: left; margin: 0px; padding: 0px; width: 80px;"><img alt="" class="avatar avatar-80 photo" height="80" src="http://0.gravatar.com/avatar/c77862abc00975bdb42157e7f29ed85b?s=80&d=http%3A%2F%2F0.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D80&r=G" style="border: 0px !important; max-width: 100%; width: 80px;" width="80" /><br /><div class="ts-fab-social-links" style="margin: 0.1em 0px 0px; padding: 0px; text-align: center;"></div><div style="margin-bottom: 20px;"></div></div><div class="ts-fab-text" style="line-height: 1.5; margin: 0px 0px 0px 96px; padding: 0px;"><div class="ts-fab-header" style="margin: 0px 0px 10px; padding: 0px;"><h4 style="clear: none !important; color: #003366; font-size: 18px; line-height: 1 !important; margin: 0px 0px 0.2em !important; padding: 0px;">Allen Gilmer</h4></div><div style="margin-bottom: 20px;"></div><div class="ts-fab-content" style="margin: 0px; padding: 0px;">Allen Gilmer is the Co-founder, Chairman and CEO of Drillinginfo. Allen is active in all aspects of Drillinginfo’s new product development and is widely recognized for his industry leadership and vision. He holds several patents in the field of multi-component seismology. He received his Bachelor of Arts in Geology from Rice University and his Master of Science in Geology from The University of Texas at El Paso. Follow him on Twitter <a href="https://twitter.com/allengilmer" style="-webkit-transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease; color: #ff6600; outline: none; text-decoration: none !important; transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease;">@allengilmer</a>.</div><div style="margin-bottom: 20px;"></div></div><div style="margin-bottom: 20px;"></div></div><div style="margin-bottom: 20px;"></div></div><div style="margin-bottom: 20px;"></div></div><div style="background-color: white; clear: both; color: #333333; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-size: 14px; line-height: 19.59375px; margin: 0px; padding: 0px;"></div><div align="center" class="ois_wrapper " data-popup-scroll="100px" data="3" id="ois_3" rel="10023" style="background-color: white; color: #333333; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-size: 14px; line-height: 19.59375px; margin: 5px 0px; padding: 0px;"><div class="ois_box_14 container-fluid" style="background-color: transparent !important; border: none; font-family: inherit; font-size: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; max-width: 650px; overflow: visible; padding: 0px 20px; text-align: left; vertical-align: baseline;"></div></div></div><br />

DrillingInfo / Allen Gilmer : Eagle Ford Shale Takeaways: 5 Reasons You Must Become an Exceptional Shale Oil Operator

Many look to the Eagle Ford Shale as a phenomenal example of US oil and gas companies doing exceptional things. But not everyone shares our ...

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A new Africa?

<div class="entry" style="background-color: white; margin: 0px; padding: 0px;"><div class="separator" style="clear: both; text-align: left;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbQDiYj4vrJsOr8m3TxpYes4xdMKvqIpOFECGtdS9VAyOe8zvvvrKDLhIMCvOIwnb0JzF9PWFbR1EVWBxE8yTNA4LWySi8ZI6ycc1bZJBTWkrwpZRnvmCaRX7G2vCjiwU0A1myeytXFUCq/s1600/iStock_000016177667_ExtraSmall.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbQDiYj4vrJsOr8m3TxpYes4xdMKvqIpOFECGtdS9VAyOe8zvvvrKDLhIMCvOIwnb0JzF9PWFbR1EVWBxE8yTNA4LWySi8ZI6ycc1bZJBTWkrwpZRnvmCaRX7G2vCjiwU0A1myeytXFUCq/s320/iStock_000016177667_ExtraSmall.jpg" width="320" /></a></div><h2 class="top-margin" style="color: #003366; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-weight: normal; line-height: 22px; margin: 0px 0px 10px; padding: 0px 0px 15px;"><span style="color: #333333; font-size: 14px; line-height: 19.59375px;">Recent advances in technology and data capabilities is "well" known. From one estimate, a single well can produce a terabyte of data per day.  There is also the large amounts of archived data from decades of drilling activity sitting dormant for decades as "useless" information.  What is also "well" known is that incredible amounts of data is yet to be collected, formatted and accessed by new technology.  Can this movement of technology, engineering, and data analysis change the status of a continent?  </span></h2><div style="color: #333333; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-size: 14px; line-height: 19.59375px;">-----</div><div style="color: #333333; font-family: 'Helvetica Neue', Helvetica, sans-serif; line-height: 19.59375px;"><a href="http://info.drillinginfo.com/di-blog/" target="_blank">DRILLINGINFO BLOG</a></div><div style="color: #333333; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-size: 14px; line-height: 19.59375px;">Below is a partial of the blog post at <a href="http://www.drillinginfo.com/" target="_blank">Drillinginfo</a> which touches on this topic.  Have a look at the below and read the <a href="http://info.drillinginfo.com/africa-oil-and-gas-mozambique-president-oil/" target="_blank">full article</a>  by <span style="line-height: 21px;">Andrew Hayman</span> on Drillinginfo's  <a href="http://info.drillinginfo.com/" target="_blank">blog</a>. </div><div style="color: #333333; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-size: 14px; line-height: 19.59375px;"><br /></div><h2 style="color: #3a6189; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-size: 22px; font-weight: normal; line-height: 26px; margin: 0px; padding: 0px;"><a href="http://info.drillinginfo.com/africa-oil-and-gas-mozambique-president-oil/" style="-webkit-transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease; color: #ec7100; outline: 0px; transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease;">Africa Oil and Gas: Mozambique’s President Leads the Charge for Exploration and Development</a></h2><div class="entry" style="color: #333333; font-family: 'Helvetica Neue', Helvetica, sans-serif; font-size: 14px; line-height: 19.59375px; margin: 0px; padding: 0px;"><div style="margin-bottom: 20px;"><a class="cboxElement" href="http://info.drillinginfo.com/wp-content/uploads/2013/08/iStock_000016177667_ExtraSmall.jpg" rel="lightbox[8626]" style="-webkit-transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease; color: #ff6600; outline: none; text-decoration: none; transition: background-color 0.2s ease, border 0.2s ease, color 0.2s ease;" title="Africa Oil and Gas: Mozambique’s President Leads the Charge for Exploration and Development"><img alt="Africa Oil and Gas: Mozambique’s President Leads the Charge for Oil Development" class="alignright size-full wp-image-8936" height="282" src="http://info.drillinginfo.com/wp-content/uploads/2013/08/iStock_000016177667_ExtraSmall.jpg" style="border: none; float: right; margin: 0px 0px 20px 20px;" width="425" /></a>East Africa oil and gas has become a focus of attention for African new ventures for most international oil companies (IOCs), from Houston to Beijing.</div><div style="margin-bottom: 20px;">Decades of indifference about East Africa were predicated on the notion that East Africa was, at best, modestly gas prone.</div><div style="margin-bottom: 20px;">But the huge, high-quality gas finds in exceptional reservoirs in the offshore Rovuma Basin in Mozambique have brought IOCs to East Africa as never before. Multi-billion dollar post-appraisal deals have been done (Eni-CNPC, Videocon-ONGC-OIL); and are being negotiated (Anadarko, with many suitors).</div><div style="margin-bottom: 20px;"><strong>With continuing geopolitical difficulties in North Africa and in Nigeria, where better place in Africa to explore?</strong><br /><strong><br /></strong>Read the <a href="http://info.drillinginfo.com/africa-oil-and-gas-mozambique-president-oil/" target="_blank">full article</a> here </div><div class="ts-fab-wrapper" id="ts-fab-below" style="clear: both; margin: 0px 0px 2em; padding: 0px;"><div class="ts-fab-tabs" style="margin: 0px; padding: 0px;"><div class="ts-fab-tab" id="ts-fab-bio-below" style="border: 2px solid rgb(51, 51, 51); margin: 0px; min-height: 80px; overflow: hidden; padding: 12px;"><div class="ts-fab-text" style="line-height: 1.5; margin: 0px 0px 0px 96px; padding: 0px;"><div style="margin-bottom: 20px;"></div></div><div style="margin-bottom: 20px;"></div></div><div style="margin-bottom: 20px;"></div></div><div style="margin-bottom: 20px;"></div></div><div style="margin-bottom: 20px;"><span id="pty_trigger"></span></div></div></div>

A new Africa?

Recent advances in technology and data capabilities is "well" known. From one estimate, a single well can produce a terabyte of da...

Read more »