My view for decades has been the “superpower “ of the super majors is there access to cheap(er) capital. Pre Covid we had a period where everyone had access to cheap capital and thus the creation of the likes of Concho, Pioneer etc. That period is over, so the majors can, again, exercise their superpower.
However, other than organizing the BIG cap intensive stuff (Guyana etc) the majors and larger publics, have shown little differentiation in their ability to understand and optimize reservoir exploitation. Which is almost all executed using contractors, who are equally available to any sized operator. A recent study of the Permian showed in the Delaware basin the clear exploitation winner is a smaller private company based in Oklahoma that, with hundreds of wells completed, is performing as stair step better than all the public companies who claim to be “best in class”. I am sure there are many reasons to explain some differences (geology, ratio of parent to child wells, etc), but if you are in the VP or C suite of a larger operator, are you just saying these excuses or are you doing the work to parse the data to really understand what can be learned? I am afraid the answer is more the former than the latter. Excuses won’t develop solutions. The hard work of root cause analysis is required.
Sorry for the rant! But this is something I feel very strongly about. Cheers!
Nov 4, 2023·edited Nov 4, 2023Liked by Arjun Murti
Arjun, your personal stories from working in the industry are always appreciated, it gives good color commentary for people and companies. To many people (myself included) the O&G industry is just earnings calls, public interviews and financial statements, where most of the personalities and drama have been washed out. Definitely personal experience gives you a better sense of the industry.
My view for decades has been the “superpower “ of the super majors is there access to cheap(er) capital. Pre Covid we had a period where everyone had access to cheap capital and thus the creation of the likes of Concho, Pioneer etc. That period is over, so the majors can, again, exercise their superpower.
However, other than organizing the BIG cap intensive stuff (Guyana etc) the majors and larger publics, have shown little differentiation in their ability to understand and optimize reservoir exploitation. Which is almost all executed using contractors, who are equally available to any sized operator. A recent study of the Permian showed in the Delaware basin the clear exploitation winner is a smaller private company based in Oklahoma that, with hundreds of wells completed, is performing as stair step better than all the public companies who claim to be “best in class”. I am sure there are many reasons to explain some differences (geology, ratio of parent to child wells, etc), but if you are in the VP or C suite of a larger operator, are you just saying these excuses or are you doing the work to parse the data to really understand what can be learned? I am afraid the answer is more the former than the latter. Excuses won’t develop solutions. The hard work of root cause analysis is required.
Sorry for the rant! But this is something I feel very strongly about. Cheers!
It's an excellent comment Steve C. Very well said!
Great analysis.
Arjun, your personal stories from working in the industry are always appreciated, it gives good color commentary for people and companies. To many people (myself included) the O&G industry is just earnings calls, public interviews and financial statements, where most of the personalities and drama have been washed out. Definitely personal experience gives you a better sense of the industry.
thank you!