Great update Arjun. Lots of good info. Let's not forget the role of technology in keeping the Permian curve from dipping down too quickly. We are now turning 4X new oil per rig than we did in 2017. It's a simplistic measure. But some times simplicity is its own reward. Cheers!
Jul 16, 2023·edited Jul 16, 2023Liked by Arjun Murti
Regarding the Permian and shale recovery in general, Darren Woods said at the Bernstein conference that XOM only get's about 10% recovery in shale right now but they think they can double that. If XOM can really double recovery will that have a significant effect on supply, i.e. would they license that tech to other companies such that most shale production can double recovery?
I don't think they'd need to license their tech...others will figure it out. No doubt there is significant long-term resource still to be developed in the Permian. But the cycles of growth aren't necessarily continuous.
Jul 16, 2023·edited Jul 16, 2023Liked by Arjun Murti
Top quality! I've paid a lot over the years for content not half as good as what Arjun and Veriten publish for free.
" So far, the sector is passing with flying colors the important test of retaining improved ROCE despite sequentially lower oil prices." Arjun, can you give us your sense for how quickly management and shareholders can switch from 'no CAPEX' to 'drill baby drill' and the subsequent erosion of ROCE? Given what happened in the last cycle, maybe everyone will be more cautious this cycle? It might take years for the mentality to shift for fear of repeating the previous cycle?
Good stuff as always Arjun! A couple of real points of interest. 1. While Permian peak is further out, that still means growth for E&P has to come from somewhere else (only so much consolidation will do without ability to add net new geologic resource). If growth is your objective, then you need to navigate the diversification pathway which as note, will cause some investor rotation. 2. Diversified play in E&P--you mean different basins/regions versus integrating further down the value chain? For me, I wonder if there is more room to run in the GOM. Unless we have some major shift in geopolitics I assume LATAM (Brazil, Mexico, Venezuela) is challenged which is why you focus on Canada? What would have to happen to have companies return to those regions? Do you think the time for foreign shale reserves is finally nigh?--Argentina, China, Russia. 3. What about asset light integration? Supply chain JVs with upstream and global midstream/downstream players with low access to reserves?
Saw you on power hungry and subscribed! Thanks
Thanks so much!
Great update Arjun. Lots of good info. Let's not forget the role of technology in keeping the Permian curve from dipping down too quickly. We are now turning 4X new oil per rig than we did in 2017. It's a simplistic measure. But some times simplicity is its own reward. Cheers!
Thanks Dave.
Regarding the Permian and shale recovery in general, Darren Woods said at the Bernstein conference that XOM only get's about 10% recovery in shale right now but they think they can double that. If XOM can really double recovery will that have a significant effect on supply, i.e. would they license that tech to other companies such that most shale production can double recovery?
https://seekingalpha.com/article/4608790-exxon-mobil-corp-xom-bernsteins-39th-annual-strategic-decisions-conference-2023-call
I don't think they'd need to license their tech...others will figure it out. No doubt there is significant long-term resource still to be developed in the Permian. But the cycles of growth aren't necessarily continuous.
Top quality! I've paid a lot over the years for content not half as good as what Arjun and Veriten publish for free.
" So far, the sector is passing with flying colors the important test of retaining improved ROCE despite sequentially lower oil prices." Arjun, can you give us your sense for how quickly management and shareholders can switch from 'no CAPEX' to 'drill baby drill' and the subsequent erosion of ROCE? Given what happened in the last cycle, maybe everyone will be more cautious this cycle? It might take years for the mentality to shift for fear of repeating the previous cycle?
Thank you Investor!
Thank you for sharing your work, and I hope you are successful in reaching your golfing goal this year.
thank you Alan!
Good stuff as always Arjun! A couple of real points of interest. 1. While Permian peak is further out, that still means growth for E&P has to come from somewhere else (only so much consolidation will do without ability to add net new geologic resource). If growth is your objective, then you need to navigate the diversification pathway which as note, will cause some investor rotation. 2. Diversified play in E&P--you mean different basins/regions versus integrating further down the value chain? For me, I wonder if there is more room to run in the GOM. Unless we have some major shift in geopolitics I assume LATAM (Brazil, Mexico, Venezuela) is challenged which is why you focus on Canada? What would have to happen to have companies return to those regions? Do you think the time for foreign shale reserves is finally nigh?--Argentina, China, Russia. 3. What about asset light integration? Supply chain JVs with upstream and global midstream/downstream players with low access to reserves?
Deb, aways great to hear from you. and yes, for E&Ps, when saying "diversified" I mean basins/regions. including global! though none of this is easy.
Thanks and thanks again. It is great to get your updates and I enjoy learning about you personally.
Thank you Martin.