Another Reader Weighs In On The Ever-Changing US Shale Revolution -- March 11, 2021

A reader posted a long discussion in response to an earlier post. Prior to receiving those comments, I received a note from another reader via e-mail. The e-mail from that reader is posted below with slight editing.

OilPrice article and my comments here.

From the reader regarding my comments on the oilprice.com article:

I was so glad to see you refer to that Oilprice article and [comment on] many of the important components stated and/or implied by that author's belated grasp of what has been occurring in this Shale Revolution.

Focusing specifically upon the expanding Tier 1 acreage, there is an evolving 'commercial' aspect (for want of a better characterization) that is taking place in lock step with ever improving technological processes by which more hydrocarbons are being extracted at lower cost. 

In the Bakken, this 'commercial' aspect may best be displayed by Kraken Oil  & Gas.

Backed by private equity, Kraken has picked up acreage fairly cheaply of what might have been considered lower quality rock. 

Using these new drilling/completion techniques, plucky, privately owned Kraken can make quick decisions, take chances on cutting edge innovations, not need to answer to public investors, and operate with considerably lower overhead than larger, publicly owned peers.

I am seeing this unfold in the Appalachia Basin at lightening speed, and - as the current rig employment in the Permian now shows - the Texas E&Ps are likewise being increasingly influenced by the 'little guys'. 

Furthermore, as shown by the massive exiting of large-yet-ineffective operators,  huge amounts of productive acreage is being marketed at dirt cheap prices.

In the Appalachian Basin, this has been/is being displayed by Shell, Exxon, EOG, Chevron, Anadarko, Noble, Alta literally dumping millions of acres on the market. 

Much of this is being snapped up by little guys like Inflection, Rockdale, Olympus and several other No Names that are being formed even as we 'speak'. 

These 'little guys' are focusing on smaller, somewhat out of the way land that outfits like Continental, Hess, EQT, Range, et al do not have keen interest in (in their respective regions) as they do not economically fit into the bigger companies' strategic plans.

Olympus is a good example as they have consolidated a fairly contiguous land position northeast of Pittsburgh (enabling efficient development) and just drilled the longest Marcellus lateral on record (over 20,000 feet).

This stuff keeps evolving at blinding speed but the expansion of productive acreage continues to grow - as you have stated - NOT decrease.