Why do the big players think they can do better?

[Douglas Buckland + 6,308]

I have a question for you...

Why do the major players who are moving into the Permian, and other shale plays, think they can make it work any better than the small or mid cap outfits?

It does not matter who owns or drills these wells, the drastic decline curves, lack of pipeline capacity, lack of experienced personnel and the available technology remains the same.

From my perspective, they have deeper pockets, which will simply allow them to bleed longer.

Furthermore, with their top heavy organizations, bloated HR and HSE departments and their process driven organizations (if it is not in the manual you will not do it, no innovation or thinking out of the box allowed), their overhead is much greater than the smaller operators and their cost/bbl higher.

The big outfits do NOT have any magical new technology available to them. The technology is generally advanced by the service companies and is available to anyone willing to pay for it.

So again, why do the big players think they will do better in the shale oil arena?

[Ian Austin + 131]

12 hours ago, Douglas Buckland said:

I have a question for you...

Why do the major players who are moving into the Permian, and other shale plays, think they can make it work any better than the small or mid cap outfits?

It does not matter who owns or drills these wells, the drastic decline curves, lack of pipeline capacity, lack of experienced personnel and the available technology remains the same.

From my perspective, they have deeper pockets, which will simply allow them to bleed longer.

Furthermore, with their top heavy organizations, bloated HR and HSE departments and their process driven organizations (if it is not in the manual you will not do it, no innovation or thinking out of the box allowed), their overhead is much greater than the smaller operators and their cost/bbl higher.

The big outfits do NOT have any magical new technology available to them. The technology is generally advanced by the service companies and is available to anyone willing to pay for it.

So again, why do the big players think they will do better in the shale oil arena?

I think they’re banking on integration - skinny upstream profit (if any) to help feed the downstream beast. 

Also, and only my opinion: a number of these majors have pretty poor recent track records with respect to reserve replacement. Depending on their go forward oil price forecasts, adding Shale resource/reserve may make the books a little better (at least for a while...). I always considered Shale a decent diversification strategy for the majors - they can absorb the relative lack of profit inside the overall portfolio, which gaining diversification and the reserves as noted above. 

Very good points on technology. I feel like those who haven’t worked the Wells (D&C) Business are a tad ignorant of this fact. 

Edited April 19, 2019 by Ian Austin