For Investors Only: Has The Focus in the Bakken Changed?

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A Reuters story, the author's thesis:

Investors need to stop rewarding oil and gas companies for chasing growth, a pursuit that worked in the past but is now consuming too much capital, analysts at Tudor Pickering Holt & Company said in a self-described "manifesto" on Tuesday.

Instead, the focus should be on capital efficiency, returns and margins, the Houston-based investment bank and research firm said.

To some extent, it looks like this is already happening in the Bakken. We're now in Phase III of this boom. Phase I: major players staked their territory; Phase II: the "hype" as the players raised capital; and, now Phase III: the matter of day-to-day drilling and fracking.

To some extent, to someone not living or working in the Bakken, it all seems a bit boring now. We're seeing the same stories day after day: half a dozen new permits; new wells being reported with IPs that are almost predictable (based on the producer), and stories on infrastructure concerns.

I do think we have at least one more round of consolidation: some of the larger companies already in the Bakken will buy out some of the smaller players, simply because it is getting too cost prohibitive to drill for some of the smaller companies. But even so, I don't expect a lot of exciting headlines any time soon. The small players truly have so little acreage to sell that it won't impact the big companies all that much.

For me, I appreciate boring. The last thing I need is "exciting" news from the EPA.

By the way, Tudor Pickering Holt and Company, linked above, mention several companies they like including three big ones in the Bakken: CLR, BEXP, OAS; and a fourth one, new to the Bakken: OXY.

By the way, I don't know enough about OXY to comment, but I wonder if CLR satisfies the "manifesto" of Tudor et al. One can argue that CLR is chasing growth with its stated goal to double their number of rigs in the Bakken over the next three to five years. CLR already has the greatest number of rigs. Doubling would be a quantum jump, and huge capital expenses. I get the feeling that BEXP and OAS are pretty content with the number of rigs they currently have.