Aramco to Drop $133B on Drilling over Decade

[TraderTate + 186]

No more Aramco IPO, and the Saudis still need to develop more oil and gas fields to offset mature-field production decline, so they are ready to drop $133 billion on drilling over the next decade. I'd love to work to put together a comparison of what everyone's going to spend on drilling, though it's a bit tougher when we're not looking at all state-run outfits. Also, would like to look comparatively at what it really costs to drill--what everyone's going to get for their drilling. 

[John Foote + 1,135]

The cost, and time, for well completion at Aramco are probably 3X a typical large IOC. 70-110 days typical for a basic land well. A lot of be careful, avoid being on the hook for a decision, and over-the-top consensus driven to ensure face can't be lost. Service companies on the clock standing around waiting for directions, sub-optimized fluids by separating decisions, drillers not selecting the fluids because Aramco can't trust the contractors to do it, left over from ions ago when Aramco did most of the work themselves, before the extensive use of agents, contracts, and spreading the work and commissions around took root. It's a bit hard to explain if you haven't been there.

That less the $3 barrel lift cost, a real IPO would eventually reveal something else, maybe even their local one will. For now they can allocate costs elsewhere, as they probably did for the prospectus, but the non-operating cost then have to be "to the moon Alice" high too offset.

Edited December 3, 2019 by John Foote
left out a word

[NickW + 2,714]

3 hours ago, John Foote said:

The cost, and time, for well completion at Aramco are probably 3X a typical large IOC. 70-110 days typical for a basic land well. A lot of be careful, avoid being on the hook for a decision, and over-the-top consensus driven to ensure face can't be lost. Service companies on the clock standing around waiting for directions, sub-optimized fluids by separating decisions, drillers not selecting the fluids because Aramco can't trust the contractors to do it, left over from ions ago when Aramco did most of the work themselves, before the extensive use of agents, contracts, and spreading the work and commissions around took root. It's a bit hard to explain if you haven't been there.

That less the $3 barrel lift cost, a real IPO would eventually reveal something else, maybe even their local one will. For now they can allocate costs elsewhere, as they probably did for the prospectus, but the non-operating cost then have to be "to the moon Alice" high too offset.

I once got invited to take part in a Drilling and Workover safety review of contractors in Dammam. 

First day we visited this site - it was a large repair and marshalling yard for trucks used to haul kit out to the drill sites. The Safety review team, mostly Saudis were most put out when I identified about 20 significant safety issues which i documented. 

This delayed them getting to their 4 hour Safety Review feast (dustbin lids of whole cooked lamb and rice) and as a result I wasn't invited again. 

[John Foote + 1,135]

4 minutes ago, NickW said:

I once got invited to take part in a Drilling and Workover safety review of contractors in Dammam. 

I had three good friends in the safety inspection business. The compromises were more than two of them could handle, and to their credit, they never backed down personally and their division manager always backed them. I think one made it five years, the other left after four and that meant walking away from a nice RIP. The Radian fire soured me to a point I could never really recover from attitude wise.

[NickW + 2,714]

7 minutes ago, John Foote said:

I had three good friends in the safety inspection business. The compromises were more than two of them could handle, and to their credit, they never backed down personally and their division manager always backed them. I think one made it five years, the other left after four and that meant walking away from a nice RIP. The Radian fire soured me to a point I could never really recover from attitude wise.

After my time but former colleagues told me about it.