Idle Rambling Regarding The Pioneer - Double Point Eagle Deal -- April 2, 2021

In a sidebar discussion, a reader and I were discussing the Pioneer - Double Point Energy deal. See this post. See this twitter thread.

The reader mentioned the "vertical feet of play" in the Permian.

My not-ready-for-prime-time reply:

Yes, the "vertical feet of play" is often mentioned.

For me that's another questionable metric with regard to horizontal / unconventional / tight oil drilling. I've discussed it before on the blog. I might have to talk about it again.

Except I get so much pushback, it's not worth it to bring it up again. LOL.

It all goes back to original oil in place -- OOIP -- (with all else being equal: porosity, permeability; quality of oil; percent recoverable through primary production).

"Vertical feet of play" is a conventional drilling metric. It's not a metric I find useful in shale.

A second concept: how much money can one person make in one lifetime? Sheffield (CEO of Pioneer) appears to be putting together an "empire" that will outlive him. Harold Hamm, however, has decided to drill the heck out of the empire he already owns. Harold Hamm is focused on free cash flow. Sheffield seems to be focused on something else. Maybe he thinks he is the Elon Musk of the Permian.

A year ago or so, Sheffield said there was no reason for more acquisitions; he said he already had so many locations, he would never drill them all before he died. Or something to that effect. And now, a year later, he pays an unbelievable amount of money for an acquisition. Doesn't make sense.

Harold Hamm may yet make another acquisition if the price is right, but it seems to me he is simply going to drill out the Bakken to the extent possible and see what happens. He is getting to be an old man; he proved he could do it. Nothing else to prove now except to see how many wells he can drill with three or four rigs. Meanwhile Sheffield has seven (?) rigs in the Permian. Lots of CAPEX with lots of debt.

This should be quite fascinating to watch: comparing XOM, COP (BR), PXD, and CLR. Same with Bud Brigham and MNRL -- I think he's thinking like Harold Hamm.