It was noted that Oasis Petroleum, in their conference call, suggested that unconventional drilling is significantly different that what has gone on in the past. With conventional drilling, Oasis suggested it was just that: drilling. But with unconventional, horizontal drilling, and fracturing, Oasis says it is a lot more like manufacturing than drilling.
This is how I replied, pretty much unedited, not very polished, but hopefully folks get what I'm trying to say. Here's the reply:
One of the great things the Air Force offered was outstanding continuing education in areas one would not expect. I received a lot of free education with the Air Force. One of the things I most enjoyed was learning about "core competencies" of businesses, and learning that successful businesses were more likely to become successful when they learned what business they WERE REALLY in.
For example, one could argue that Burlington Northern took off as a railroad when it realized it was not in the railroad business, but in the TRANSPORTATION business, and set up intermodal industrial parks (like that commerce center in Bismarck, North Dakota) in which Burlington Northern brought together ocean-going tankers on the coasts, and truckers across the nation, and integrated their operations (of course, the intermodal container was a huge innovation, but it came about when someone recognized the connectivity between ships-trains-trucks).
Likewise, in the old days, they talk about "sticking a straw in the ground," a conventional well, but there's no question that unconventional drilling, horizontal and fracking, has changed all that. In the old days, the key was finding the oil; today, it seems the key is completing a well. So, when I hear Oasis using language like this, it suggests to me their leadership is very, very smart, and they've recognized they are not in in the oil drilling business, but in something else, I'm not sure what else to call it, but like they say, it's more like a manufacturing process than anything else.
In manufacturing, one needs to get the components to the assembly line on time and in the right order and not have late deliveries of crucial components or components stacking up waiting to be used, taking up space.
Talk about similarities in the Bakken. Each well is a project of its own, with a project manager, a project calendar (probably made by Microsoft), and things moving along on schedule -- lease, pad building, small rig spudding, large rig drilling to total depth, frack team on site, fracking, trucking stuff in and trucking stuff out. They say it takes 74 companies to get a well from a dream to production.
From an investor's point of view, I feel more comfortable investing in a company who has a CEO who seems to see the big picture, perhaps from a different angle. When I see comments made by the CEOs in these various conference calls, one gets the impression we have some brilliant people in charge of these companies. My respect for Oasis went way up when I heard/read those comments.
If the Bakken is the nation's largest industrial park, Williston is the front office. Be sure to take a hard hat if visiting.
See also: Oasis Wells Services, Inc., a new company.
The following photos were sent to me, taken near Westby, Montana, just the across the state from North Dakota. It certainly gives one the feeling that the activity in the Williston Basin is a manufacturing process, not simply drilling wells.
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