Day two at EnerCom’s The Oil & Gas Conference® featured 35 presentations from a wide array of oil and gas company CEOs and industry professionals, including 30 E&Ps producing oil and gas from shale basins in the U.S. and Canada and from conventional plays such as the Gulf of Mexico. Also featured were leading oilfield service companies and several respected energy industry experts.
The major topic for most shale players was generating free cash and growing production. Attendees reported full rooms or standing room only in many of the company presentations, including WPX Energy (ticker: WPX), privately-held Anschutz Exploration, Bonanza Creek Energy (ticker: BCEI), Elk Petroleum (ticker: ELK), SM Energy (ticker: SM), PDC Energy (ticker: PDCE) and Lonestar Resources (ticker: LONE).
Heard at the EnerCom conference: “We want to pull as many hydrocarbons out of the ground as quickly as we can”
It might sound like basic oil business 101, but Joe DeDominic, president and COO of Anschutz, delivered some excellent lead-by-example bits of advice in his breakout session: “We try to reduce as many variables as we can on every DSU.” DeDominic said the goal is to “pull as many hydrocarbons out of the ground as quickly as we can.”
He talked about the shale developers’ great success reducing costs, referencing Whiting Petroleum CEO Brad Holly’s presentation, in which Holly mentioned Whiting had reduced the time to drill long wells in the Bakken to 9 days. “When we were there, it was 30 days,” DeDominic said.
DeDominic talked about calculating the total cost per well, including the cost of artificial lift. “That’s how we run our business: we want to know the total cost.”
One of the investors asked if Anschutz had water issues. DeDominic said the answer was no issues, because the company takes care of it up front in the planning process.
He talked about the company’s efforts in the Powder River Basin. “We have to learn from what other people experience. Back in 2014-15, when we reorganized the company, we did a full analysis and the Powder really stood out to us as the place to be. When you look at EURs, costs and netbacks, the Powder really stands up.” Anschutz is the largest private oil and gas company in the PRB, and it controls over 385,000 net acres.
Economics in 2019-2020?
Avery Shenfeld, CIBC’s chief economist for North America, talked about a convergence of economic conditions on the horizon including the global economy running out of unemployed people and China’s exports being far more important to China. “China can’t afford a trade war with the U.S.”
Shenfeld, who is Canadian, said that the large number of actions that have been put in place by the Trump administration have essentially served to “put enemies back on the enemies list and friends back on the friends list.”
Shenfeld said that in 2019 the U.S. deficit will go over $1 trillion, referencing the fact that the economy is in a full employment time and that the Federal Reserve is raising interest rates. He said that in 2019 Congress will suddenly take notice that their country has a $1 trillion budget deficit and they will make much noise about it and take action such as reducing expenditures and raising taxes. Shenfeld said the budget deficit will then come down a little in 2020. Meantime the Federal Reserve will keep blindly raising rates.
“If you have to borrow long term, I would do it sooner rather than later,” Shenfeld told the room.
Looking at U.S. oil and liquids imports and exports
EIA petroleum analyst Mason Hamilton gave a presentation that took a data-packed look at the U.S. export and import picture for crude oil, distilled products and natural gas liquids, the largest exported of the gas liquids being propane which is chiefly going toward petrochemical feedstock for Asia.
“Distillate is the fuel of economic growth,” Hamilton said.
Hamilton’s and the other webcasts and presentations are available on The Oil & Gas Conference website.
