Holy Vaca Muerta! There Is Life Beyond The Permian
“Finding another Permian will not be easy. It’s a special place,” Wilhelm said, explaining the basin has robust infrastructure and services, along with a fairly predictable regulatory environment – each a key ingredient.
Timing is also important for a company to achieve competitive, full-cycle returns, Wilhelm said. Shell entered the Permian Basin in 2012.
“It’s not luck. It’s based on two years of solid geological work,” he said, adding that by going in relatively early, the company managed to pay a fraction of what the acreage would command in today’s market. “That’s the recipe we intend to use.”
Shell also has high hopes for its Canadian assets, as well as those in the Utica basin. But it’s the Vaca Muerta where things could heat up.
“What I think is the one play in our portfolio that is most likely to rival the Permian for resource development is the Vaca Muerta, Wilhelm said.
Shell has been in Argentina for more than 100 years, working through the up and down cycles, as well as the political system there – one Wilhelm said is supportive and flexible to business, with a straight-forward regulatory environment.
Chesapeake Steps Back
Frank Patterson, executive vice president for exploration and production at Chesapeake Energy Corp., joined the company in 2015 and went to work looking for the next, best place to drill. Chesapeake was drilling the maximum amount of wells, not particularly efficiently, but mostly for appraisal and to hold the acreage.
“That’s over,” he said.
And once the dust settled, the company had to determine what exactly it had. That turned out to be strong acreage positions in the Marcellus, the Utica, Haynesville, Eagle Ford, mid-continent and Powder River Basin – all of which was only about 25 percent drilled, and that set the stage for more efficient drilling in several lucrative plays.
The company’s history of holding acreage positions Chesapeake with an opportunity to run it with new technology and more efficiency, he said. Plus, the company doesn’t have acquisition costs because Chesapeake already owns a broad swath of attractive assets.
“We basically reinvented the way we look at the company,” he said. “We can look at our footprint, and we don’t have to get on that Permian train; there’s nothing wrong with it – it’s great – but we can step back and look at what have, divest some assets, heal balance sheet and move forward.”
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